With rising interest rates, getting the maximum value for your building is a valid concern. What are some ways to put your property in a position to command the best offer in a changing market?
THE NUMBERS
This is the first thing a potential buyer is looking at. Are your rents at market rate? Are your expenses at a minimum? This may be the time to change some vendors, raise rents if you can and reduce unnecessary expenses if possible, to make the bottom line look as strong as possible. A better bottom line will lead to a higher cap rate for you, the seller, and more dollars at closing. This is also important when it comes to financing for the new buyer. The more net operating income, the larger the available loan. Maybe talk to some lenders to see what kind of financing terms and amounts would be available.
CURB APPEAL
Just as with a single-family home, curb appeal is important. Potential buyers will look at the numbers and then drive by. How does your building compare to others nearby? Is there debris, tenants’ belongings, or nonoperational vehicles on your property? How is the landscaping? The paint? Sometimes just painting the trim can make a huge difference.
PHOTOGRAPHY
I am personally, a terrible photographer. I have purchased good equipment but to no avail. Therefore when I put together an OFFERING MEMORANDUM (OM) an a new listing, I hire an excellent photographer and get a large number of great photos to choose from. I get aerial shots, and interior and exterior views and choose the best ones to include in my OM. In most cases, this will be a potential buyer’s first look at your property and, as they say, there is never a second chance to make a first impression.
YOUR BROKER
This may be the most important choice of all. Does your broker specialize in multi-family properties? How long has your broker been in the business and what is his track record? Can you talk with any former clients for their opinion? As multi-family marketing and financing are different from single-family sales, you want to find the person that can best market and sell your building. You also want someone who will guide you through the escrow process, inspections, and potential exchanges all the way to closing.
What we at PRS PROPERTIES CAN DO. We can discuss with you the current rents in your area and supply you with comparable rental prices for similar properties. Before you hire a manager, make sure the compensation is fair to you! We can also look at your building for changes that might allow you to get a higher value in order to create value without huge expenses for your building. We can help you to get the maximum value for your property, should you decide to sell, or the maximum return if you are planning to keep your building.
We always have many investors who are looking for “as-is” properties and are willing to purchase with low rents, a moratorium, or even with a problem tenant in place. We have put together numerous transactions over the years which involve properties that are not listed for sale. Many investors are in 1031 exchanges and need to identify a replacement property before their 45-day identification period runs out.
Should you decide to put your property on the market, we will put together an aggressive, targeted, and professional campaign to get your property sold fast. We have been doing this for over 40 years, and we will use all the tools available to bring you the most dollars at closing. If you are thinking of selling or are just curious about the value of your property, don’t hesitate to give us a call.
Remember – KNOWLEDGE IS POWER!
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