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In this video, René Nelson goes into detail about each of the steps you can take when you are looking at buying or selling an apartment complex or multi-family unit in the Eugene-Springfield area.
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Well to sell your apartment complex the first thing that you need to do is contact an industry expert, especially a commercial real estate broker, and find out what’s happening in the market. So there’s several things that go into play. We look at the cap rate and we look at other sold comparable properties, and we look at the condition of your property in relation to those properties. And we establish a value and I’m going to talk over the next couple of series of videos on how to price your property and how to get it ready for the market. But it’s not just as easy as throwing a sign up in the yard or taking a couple of pictures and putting it out on Zillow or some site like that. There’s some complexity that goes into it.[/toggles]
Other videos you may enjoy on this topic and related topics can be found on René Nelson’s YouTube Channel. Subscribe and sign up for notifications so you are alerted when René Nelson shares more tips and tricks about the Oregon commercial real estate market.
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I’m Looking to Sell an Apartment Complex, What Actions Should I be Taking?
Learn about what a Commercial Real Estate broker looks at when you first decide to sell your apartment complex, how to get ahead of the curve on the Oregon Commercial real estate market, and how to streamline the process.
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Right now, most sellers need to get ahead of the curve, and the first thing that you want to do if you want to sell your apartment complex is you want to know what the true value is, and you want to get that price established.
That takes a little bit, because I have to do a thorough analysis of the property, looking at both the rent roll as well as the last couple of years of the operating expenses. And then I compare that to other properties that are in the market. What I’m trying to do there is really establish a price to make sure that the seller’s not leaving any money on the table and that we have a value that we know will transact at, where it’s going to entertain offers, buyers who’d be excited to make an offer.
So if someone wants to sell a property, I advise that they get ahead of the curve, they contact a broker, find out what the property value is, because the broker’s going to need some time to do some analysis of that and get the property ready to go to market.[/toggles]
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What Does It Mean to Sell a Commercial Property on the Silent Market?
Learn about how the silent market works for commercial real estate and how brokers in Oregon manage properties not listed in the open market.
[toggles title=”Read the Full Transcript”]So what happens with apartment complexes that are not listed in the open market is those are typically transacting off market, where, as a broker, I have a seller that will come to me and say, “I want to sell my apartment, but I don’t want it out on the open market.” So that’s a silent market opportunity where it’s quietly available, but they don’t want it on the open market, and I have a list that I keep of both buyers that are looking to buy and sellers that are looking to sell. So frequently, I can match a buyer and seller together, but I don’t always have both the buyer and the seller. I like to represent one party in a transaction, but I have a bunch of different commercial real estate broker friends that will call me frequently and say, “Hey, I have a 1031 buyer.
They’ve got a tight timeline.” They’re looking to buy an apartment complex because a lot of, both brokers as well as property owners in the market know that apartments are my niche and that’s one thing that I do for commercial real estate in the Eugene-Springfield area, so I receive a lot of calls from people that are looking to buy apartments and they tell me what they’re looking for and then they just say, “Hey, let me know when this becomes available.” I’ve done everything from small plexes to five units up to $20 million transactions where people have just called me and said, “This is what I’m looking for. Let me know when it becomes available,” and then we put the transaction together.[/toggles]
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How Does a Commercial Real Estate Broker Help in Selling an Apartment Complex?
This video discusses some of the discovery questions that a commercial real state broker asks prospective sellers in the Eugene-Springfield area and how those questions can lead to a market strategy and property value.
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To sell your Eugene-Springfield apartment complex, the first thing that you want to do is give me a call and let’s talk about your situation and your scenario. So some of the questions that I like to ask a seller, “Have you recently done any improvements to the property?” And I like to get a really good idea of the condition of the property. And then we look at the income stream, the net operating income that the property is generating. And then what I do is I look at comparable properties in the market. I’m continually analyzing and looking at recent sales and tracking what’s happening in the market, and so I’ll look at a seller’s property and compare that to similar properties in the market to really establish a pricing strategy on where I think that property will sell at. And then the seller and I come to an agreement on, “Yes, that’s the right price.”
And then we put together the marketing strategy. It’s not as easy as just taking a few pictures and throwing it up on a website like Zillow, because what’ll happen is buyers will show up, but they won’t be able to close the transaction. Commercial real estate is really a complex situation, the industry is continually changing. So as an example, I had an apartment complex under contract for a buyer and we had been working on this deal for almost six months and then COVID hit. Well, the lender decided, and it was really ultimately Fannie Mae because Fannie Mae is the lender that generates out the… They’re the government agency that generates out all the rules and regulations for what lenders need to follow as well as the money supply for the lenders. And Fannie Mae made a rule during COVID that a buyer has to have between 12 to 18 months’ worth of PITI reserve in the bank after closing or upon closing.
And so that made a big impact for my buyer on what they needed to have for cash reserves in the bank. So not only are they buying a $19 million apartment complex, putting a substantial 35% down payment, but now they have to have 13 months’ worth of PITI reserve in the bank. So, I recommend for somebody that’s looking to buy or sell an apartment complex, get in touch with a commercial real estate broker and deal with an expert who really understands the market. Not only on price and values, but also what’s changing in the industry and what you need to be aware of both as a buyer and a seller, because commercial real estate transactions can fall apart and you really need an expert that knows what’s happening in order to advise you.[/toggles]
If you enjoyed this video and have more questions about commercial real estate in Oregon or the Eugene-Springfield Area, click the link below to schedule a 15-minute Free Discovery Call with René Nelson!
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