These days, real estate investors are increasingly looking to multi-family properties to generate high rates of return. With demand for apartments and similar units on the rise, learning to weather fast market conditions is an imperative to getting the best value for your property.
With years of experience as a commercial broker, I’ve developed these 3 tips for maximizing profit when selling a property in a tight market.
Tip #1: Be Prepared to Answer Questions
Prior to selling a property, or even listing it, you want to be informed, this means doing your homework.
Prepare records from the current year to date, referencing profit, loss, net income and capital expenses. Remove irregularities, such as infrequent need-based repairs, to form a standard income and expense list.
Records should prove that you’ve been able to maintain a steady growth of income — if that’s not the case, you’ll need to be prepared to clearly tell potential buyers why.
Once this step is complete and your offering memorandum and supplemental literature is prepared, it’s time to list the property.
Tip #2: Hold an Open House
Talk with tenants and get ready to host an open house after the listing has been out for one week. Let the listing grow interest and don’t take the first, or even the second offer.
I recommend scheduling just one open house during a two-hour time slot. Of course if it’s a larger property, space it out between two days, if necessary.
The value in hosting one open house is immeasurable, in my experience. A large crowd indicates to everyone in attendance that the property has sparked widespread interest and creates a sense of urgency amongst buyers. It’s also important to keep in mind that one open house, as opposed to many, reduces impact on existing tenants.
Keep in mind that this is the prime time to reference details you’ve prepared about the property prior to listing it on the market. If potential buyers have any remaining questions, be sure to get back to them within two to three days with an answer.
Tip #3: Call for Offers
Five days after the open house, call potential buyers for an offer. Details about the property are still fresh in their mind and they’ve had some time to think about the investment.
If you’re doing your job right, you should expect to generate between 5 and 15 offers. After that, you’ll just need to make a choice and move forward with the deal.