Hey friends, Eric with CamShell here. Today we’re going to be talking about the best way to sell your apartment building fast. Most people in real estate; buyers, myself included, started off with smaller deals. We started doing single families, duplexes, maybe a triplex here and there. But, my brother and I were part of a purchase of a couple of larger apartment buildings recently, an 8-unit and a 12-unit, where it’s quite a different buying experience. Just anytime the numbers are higher, inherently, there’s going to be more risk involved. It’s a smaller pool of buyers because not everyone can buy a 12-unit apartment building, as opposed to a single family where there’s a big pool of buyers for it.
So, if I were to turn around and sell those apartment buildings fast, here’s six tips that I really would like to know going into it.
The first tip is info. So, when I first started, I did a cash deal on a single-family house. It wasn’t a ton of info provided by the seller because it’s just a single-family house. I can walk through it, I can take my estimation of repairs, I can see it in its entirety very quickly. With a eight or a 12-unit apartment building, that’s just not the case. You’re not typically going to be able to take it all in at once for different reasons. You need to work around tenant’s availability.
The buyers for large deals are almost always going to have silent partners.When you’re dealing with million-dollar deals, there’s not that many people that have a million dollars sitting in their bank account. So, most of the buyers are going to have silent investment partners. The more information that we can provide to those guys, the easier it is to sell an apartment building fast. Things like your rent rolls, your high-level of profit and loss statements, warranties,income verification for the past few years. All these things help the investor, or the buyer, in this case, form a better idea of the value. It helps them kind of sell the idea to the silent investors so they’re able to get you your money as quickly as possible.
Second tip when trying to sell an apartment building fast would be discreteness. So, this one is also different if I’m buying a single family home. I can do a quick walkthrough. If there’s tenants, it’s going to take 30 minutes. And if there’s no tenants, then it doesn’t matter how long it takes because I’m not bothering anyone. If we’re buying a 12-unit apartment building, people don’t really want to be bothered. It’s unsettling for the tenants because if they’ve been living in a apartment for the past however long, say, they’ve been there for five, six years. Hearing that that apartment building is up for sale is kind of unsettling for most people.
They think the rent’s going to go up, or the new landlords are just not going to be good to them. So, you want to practice as much discreteness as possible. You want to get your proof of funds before any walkthroughs, you want to get your purchase agreements and everything signed with that contingency set that we’re not going to walk every single apartment until we absolutely need to. And again, it’s just for the tenant’s sake, to keep them happy.
The third tip that I would give you is rents, which is huge. You can use this rent estimator tool to see where your rank for your area. This one was a big part of the deal that we had done. You need to make sure that the rents aren’t way below market rates. When a buyer is buying it, of course, if they’re buying it for cheaper, they’re looking for a value add. But if the rents are already where they need to be, they’re willing to pay more of a premium.
So say it’s a $1,200 apartment on the market. If you’re renting it for $1,100, it’s about a $15,000 difference in your value overall on the building. So, if there are certain things that you can do, if there’s rent increases due, if there may be some quick improvements, or there’s someone that’s not paying the rent, either getting those rents towards where the market’s at or just removing bad tenants can increase your sales price by tens of thousands of dollars, as well as make the process a lot easier on your buyer.
The fourth tip I would give you is make sure no title or city issues exist. If you have any violations, if you have any liens outstanding, you certainly want to take care of those because they are going to come up in title.
And it probably makes sense to start your title search prior to even finding a buyer, which can save you a few weeks. On average, if we’re doing a larger deal title is probably going to take, at best, three to four weeks. So, if you’re starting that process as you’re trying to find a buyer you can get it done… You can shave weeks off the time frame.
Fifth tip is you kind of got to understand which sort of buyer you’re looking for. Not all buyers are equal. If you’re okay with waiting three or four months, maybe a little bit longer to get the money, you may just want to go with a real estate agent.They’ll bring the buyer and do most of the work for a commission. But, if you’re willing to wait that long for it, then that’s fine. It’s not a huge deal if you don’t need the money right away.
If you’re looking for money fast, especially on larger deals, if it needs to be in a few weeks from now, you’re going to need a cash buyer. Cash buyers are going to have those silent investors. As long as we have the info needed, then we can get the deal done very quickly. But if it does need to be within a month, or so, you’re going to be looking for a cash buyer.
And then, your other option would be to consider seller financing, which may be right for a lot of people. Think of it like mailbox money. You’re basically going to finance the property to a buyer. So you do need to find the legitimate buyer, it can’t be some fly-by-night guy on his first deal, I wouldn’t sell or finance someone who didn’t know what they were doing. But if you’re willing to just collect a portion of the rents, they’re going to agree to an interest rate, possibly a down payment as well, so you can get some money upfront. But, if you’re willing to just sit back and get probably the most money you can for it, you may want to consider seller financing. And that could also help you on taxes as well since you’re not getting a million dollars in one year from the sale of an apartment building.
The sixth tip I would give you, and this one is just really to kind of psychologically help you when you’re showing it to the buyers, any cheap fixes that you can do, any landscaping, any paint jobs, any you know broken screens or anything like that that’s going to be a cheap fix. You don’t need to spend thousands of dollars to do it, but anything that improves the look of the place to the potential buyers that you’re showing, not only can that help you get it sold faster, but, obviously, you’re going to get a little bit more money if it looks pretty.
So, those would be my six tips. We’re not looking to sell the buildings that we currently have, but if I were looking to sell those, those are six things that I would certainly take into account.
We will be coming out with more videos weekly here, obviously. Hope you guys subscribe. I will leave contact info and everything in the description, so any questions, or anything, always feel free to reach out to me. You can call me on my cell, or you can shoot me over an email, but I will see you guys here in the next video.