Apartment buildings present some unique challenges when it comes to selling. It involves a different process than selling a house does, and that means certain steps become more important. In fact, it can be a very intimidating and overwhelming undertaking for those with little experience in this area. Here are a few of the best ways to sell an apartment building.
Get the Financials in Order
This important step to sell an apartment building should be a priority on the checklist of things to do. For it will be a concern to both investors and their lenders. In fact, this should be taken care of long before you put the property on the market.
Banks will want to examine the property’s profit and loss statements for the trailing 12 months. So you’ll want to do your best to have the numbers indicate an upward trend with respect to rents and expenses. In addition, the apartment building’s occupancy levels will be important. So you need to get the financial documents in order that will make the property appealing to investors. Investors will be very thorough in their due diligence process, so having everything ready will streamline the process for all parties. Along with the profit and loss statement, below is a list to consider gathering in preparation:
- current mortgage information and most recent statement (if you have a mortgage on the property)
- current rent-roll and leases for tenants
- proof of payment for last 6 months, all tenants
- most recent bills and service contracts for utilities
- any notes or security instruments that affect the Property (2nd mortgages, private loans, etc.)
If you begin all this early, you even be proactive in cutting expenses to make the apartment building look more profitable to prospective buyers. The things you can do include:
- Hiring a better, more efficient management company
- Billing for back utilities
- Lowering property taxes doing things like installing low-flow toilets and/or high-efficiency lighting
Make It Look Good
Next in importance to sell an apartment building is attending to the building’s physical appearance for that all-important first impression. Not only does the apartment building have to look financially attractive on paper, but it also has to actually look good to potential buyers. So here’s just some of what you can do to help the appearance:
- Take care of the general, overall cleanliness of the building
- Organize, clean, and de-rust the boiler room
- Take care of (at least) basic landscaping tasks
- Get rid of all hazards
- Touch up chipped or faded paint
Just keep in mind not to spend more on sprucing up and repairs than you can recoup at sale time. Know your target price, and do the research to see if you’re likely to get it.
Market Well to Sell an Apartment Building
Finally, if prospective buyers don’t know you have a building for sale, then there’s no way they can show any interest in buying it. And that usually comes down to effective and sometimes creative marketing. The things you can do to improve the marketing process include:
- Determining the best way to handle showings, which can be considered an aspect of the marketing process. You could, for example, select a handful of your cleanest and most personable tenants, ones you have a good relationship with, and their units to focus on at showings.
- Making sure that the management company is aware showings will take place. And be sure to incentivize doing a good job.
- Using a qualified brokerage team to get the word out in the most productive ways and represent you in the sale. (HIGHLY RECOMMEND THIS)
So the best ways to sell an apartment building are to get the financials in order, to make it look good, and to market well. Really, though, this is just a portion of all you’ll need to do to sell an apartment building. Selling an apartment building can be a lengthy and complicated process, and that’s why it’s usually best to get help from qualified real estate professionals.
