Do you own a rental residential property, a multi-family or apartment properties and want to sell it? Where to start? Well, just like any real estate sales, you start with the real estate agent.
However, selling investment properties is nothing alike to selling a residential house. A residential buyer loves to look for great pictures online, the trendiest paint color or beautiful staging in the house, a floorplan that works for their needs and wants, a location that works for their work, kids, school etc. At the end of the day, buyers decide to offer a price that goes along with the market price and more importantly, how much they love the house.
Investors still look at location, condition and market price but, more importantly, income and capital invested in the deal. They want to know how many $ they will make for the $100K they invest in and how much they have to improve the property condition to make more $$ than what they made from day one. Knowing that, as a seller, you have to present the sale in a way that buyers can see they make money, either from day one or from future opportunities.
The checklist you might want to get ready before you consider selling the property:
- Rent roll
- Rent payment history
- Expenses: property tax, insurance, management fee, repairs, reserve, collection, legal and account fee etc
- List of improvement in the past 5 years
- Copy of leases and tenant contacts. Expired dates of all leases. Deposit held from tenants
- Vacancy rate now and historical vacancy rate
- Latest P&L or the latest 2, 3 years P&L where it shows Gross Income and Net Income. Can you have certified statements from your accountant?
Deal analysis:
- What’s the current asking rent? What the rent can they get in the current condition? What the rent can increase to with improvement? How much improvement is needed?
- What’s the market price for same type properties in the area? With and without rental income analysis?
- How much cash flow the property has generated for you today?
- How much cash flow the property would generate at 15-20-25% down payments (minimum down payment required for the type of property)?
- What is the cap rate?
- What is the cash on cash?
An agent who specializes in investment properties should be able to go through this homework with you and come up with an asking price with you to make sure you get the most money for your property. That agent can also suggest things you might want to do now to sell the property at a later time but optimize your sales profit.
Choosing the right agent to sell these income-producing properties makes a huge difference for you. Let us know if you want to schedule a 15-minute call to interview us and see how we can assist you next? Call 614-949-4270 or email TracyKeffer@kw.com
