How to Prepare Your Multifamily Property for Sale
You have a small apartment complex that’s provided you a good income over the years and has appreciated in value. Now it’s time to move on.
Whatever your reasons for selling, you want to assure that you can find a buyer quickly and sell for top dollar.
Your ROI has been above average, your costs are well within the “normal” range, and your rents are above prevailing market rates. Your mortgage payments are current and your taxes and insurance are paid. You have long-term satisfied tenants, ongoing maintenance is minimal, and there are no building deficiencies that you can identify.
So what else can you do to help ensure a successful sale?
Preparing Your Units and Your Tenants
Prior to signing that listing agreement, there are a few other considerations that can boost your chances of having that dream become a reality, and many of them fall into the category of staging and showcasing.
Unless you are trying to unload a distressed property — and that’s a totally different ball game — marketing and selling multi-family homes is pretty similar to selling your own home. It’s all about perception and making a good first impression.
Not all these suggestions will apply to all properties — obviously there are differences between a duplex and a 24-unit building, between a pair of four-plexes and a multi-building gated community. But the principles are the same.
- Visual Appeal: Assess your landscaping. Are trees and shrubs well-sited, appropriate for the climate, healthy and pruned? Do you have flowers blooming? If yours is a larger complex, are there outdoor paths and seating areas? Is there lighting, both for safety and for ambience? Are there additional outside amenities, such as a pool, playground or common barbecue area that are easily accessible, clean and attractive? Are all sidewalks, approaches and paths well lighted, free of hazards, clean and appropriate?
- Parking Areas: Does the driveway need patching or resurfacing? Does the parking area need striping? Are resident and guest spaces clearly designated? Are covered parking areas (or garages) free of debris, well-lighted and easily accessible? Is the address clearly visible? Is there a property sign? Can guests and emergency responders find the property easily and quickly? How is trash handled — dumpster or individual curbside trash pickup? If possible, use fencing to shield trash receptacles from public view.
- Painting and Trim: Is the exterior, including the roof, in prime condition? Be conscious of all the small details, and consider addressing chipped paint, broken windows, bent gutters and damaged downspouts.
Working Inside Each Unit
- Upkeep and TLC: While no potential buyer will expect that every unit look stylish and brand new, it is important that you can demonstrate that all necessary routine maintenance has been performed and that outdated or malfunctioning fixtures, appliances, lighting, wiring and plumbing have been repaired or replaced. Itemized lists, dates and financial accounting will be to your advantage when attesting to your care of the property.
- Notify Tenants: Your tenants deserve adequate notification that a change in ownership is in store. That notice should be in writing and should explain what they might expect. Depending on your local and state regulations, you might disclose that their lease terms will be protected and that a new owner does (or does not) have the right to alter those terms, or to request that they move. The key is to maintain the lines of communication, and be honest in your dealings.
- Routine Inspection: Schedule a walk-through of each unit. Not only will this give you an opportunity to visit with each tenant and to answer any questions they may have (this should be after you send a notice of a pending sale), but it will also give you the chance to see if there are any potential problems. If you find that any tenant is non-compliant with your occupancy rules, now it the time to address that situation, whether it’s smoking in a smoke-free building, too many occupants, or an extra pet.
Finally, make sure all your financial records, tenant leases, and ownership documents are up-to-date and available for inspection. With a positive attitude and some “behind the scenes” preparation, you should be able to accomplish that sale within a reasonable time frame and move on to your next investment.