Check out the newest multifamily investors podcast in the making the most of your investments series!
If you’re looking at selling a train wreck of an investment property, today Marcia and I discuss the best approach to take.
René Nelson, Eugene commercial real estate broker
Marcia Edwards, Eugene residential real estate broker
Making the Most of Your Investment Properties – Part 9
Marcia Edwards: René, we’ve been talking about getting top dollar and how to do that in pricing and how to evaluate cap rates, really great information, previous programs, also how to make a good impression. Have you been representing buyers where you’ve seen it not go so well, that would help you illustrate how it’s important to buyers?
René Nelson: Yeah, and really, I have some real examples of sellers who wanted to put a blind eye on the condition of their property. So I’m gonna give you two examples. A couple of years ago, I sold a 20-unit apartment complex, and I like to walk through several units before I put it on the market so that I’m aware of the condition of your property, because my goal for you is to get ahead of any issues and tell a buyer if there is something they need to be aware of.
Marcia Edwards: And just briefly, jump in here saying, that you don’t show your hand necessarily to those tenants, by you walking through, you don’t tell them it’s on the market right?
René Nelson: No, often I tell… I have the owner tell the tenants that I’m there, giving them an insurance quote ’cause we definitely want to diffuse that with tenants.
Marcia Edwards: Okay, so it doesn’t always go so well, you said.
René Nelson: Well, I’ve had some situations where tenants start asking me questions like, “What are you doing,” and I just look to the owner and let the owner diffuse the situation. I literally have had an owner tell a tenant, “It’s none of your business,” and then that diffused that situation pretty quickly.
Marcia Edwards: Okay, now let’s talk about the first impressions that buyers have and how it didn’t go well when someone was saying, they didn’t really want to show their hand in the condition.
René Nelson: So the 20-unit that I sold, I walked through a unit, the owner said, “All 20 units are just like this.” Well, what he didn’t tell me is the first unit, and the one unit he had me walk through was his model unit, he told me he was getting ready to rent it, but it had been his model unit, so when the buyer was under contract, flew up from Los Angeles to do his inspection and his due diligence, as we were walking through every unit, we realized, “No, they really are not all the same in this great condition.” Thrash carpets, countertops that were all beat up, and unfortunately it wound up costing the seller with a price concession, he had to give up some money.
Marcia Edwards: And the price concession is usually deeper than the initial improvement would have been I think.
René Nelson: It was substantial.
Marcia Edwards: Yes, well, that’s important to know because it’s going to catch up with you throwing it under the rug or saying, generalizing is not gonna get you a paycheck like you’d hoped to see I don’t think.
If you’re looking to part with your investment property, René can help you make the most from your property’s sale. Schedule a 15-minute discovery call to better understand your investments and the market today.
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