The (home mortgage loans) Seven Mistakes to Avoid When You Sell an Apartment Project

September 28th, 2009 admin Posted in realestate |

By Darin Garman

”How You Can Spot and Avoid the Seven Mistakes that Can Literally Ruin Your Apartment Investment - Making Sure You Make Money When You Sell an Apartment Project…Avoiding the Surprises that Can Cost Thousands of Dollars.”

Even though investing in an apartment property is becoming more and more ordinary, selling a project correctly is like finding an honest politician. Plus, when you put a property on the market at a time you think may be “the right time” you’re nevertheless subject to those SURPRISES that can cost thousands and make that “fantastic investment” a real loser. You can prevent your next sale from being a loser by avoiding the subsequent mistakes:

1. Not Putting Yourself in the Buyers Shoes.

You practically need to purchase the project over again in your mind and ask yourself , “based on the future of the location and condition of the property will a buyer find the property attractive?” If you hesitate in saying “yes” you must absolutely do more analysis as to the salability of the property and the area.

2. Not inspecting all units prior to putting the project up for sale.

Most of your apartments you are familiar with but what about the ones that you haven’t been in more than a year? Be certain that previous to selling you go through the apartments AGAIN to be confident that you (and the buyers) will not experience any surprise repairs, pets or guests. One inferior apartment might cost you thousands on the negotiating table.

3. Work only with accurate income and expense figures.

Save yourself a ton of time and money by working with realistic figures. By selling the property based on the rent you think you can get and lower expenses that you think a new manager might get just won’t cut it. Be realistic - buyers will be aggressive when the figures are actual not projected.

4. Do not sell without investigating a tax deferred exchange or contract sale.

If you have had your project for a extended time it is in your best interest to review with an expert about a tax deferred exchange or installment sale. These strategies could save you literally thousands in taxes. This ought to be the very initial thing you do prior to putting your project on the market.

5. Work with an experienced broker that will work smart and protect your interests at the same time.

The best brokers specialize in apartments and have a designation such as CCIM or SIOR. Do not work with a Realtor that has open houses on Sundays and presume them to know how to help you in a lucrative marketing campaign of a project. Prior to working with them be sure to ask how many units they have sold! Get references, ask how they will market the property and verify their track record.

6. Not examining and maintaining the project ahead of the sale. Don’t let repairs and repair work go - get it taken care of NOW. Sometimes its hard to justify some of the costs of keeping the structure(s) properly maintained but think of it this way - IF YOU DO NOT PAY FOR THE CASH NOW TO MAINTAIN YOUR PROPERTY THE BUYER WILL - IN TERMS OF DISCOUNTING THE VALUE FOR REPAIRS HE WILL HAVE TO PERFORM TO BRING IT UP TO “PAR”

7. Not factoring in sufficient vacancy and reserves. Remember you may not like it but the buyer, appraiser and banker will figure in vacancy and management costs even if you have no vacancy and if you manage the project yourself. In putting your numbers together use existing rates for vacancy and management.

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