How to Prepare For a Multifamily Sale
Knowing how to prepare your property for sale is crucial.
Presenting your property in the best possible light sparks investor interest and helps you get top dollar in a transaction.
Unfortunately, many sellers don't take action to prepare their property before soliciting offers.
They don’t know what actions have the largest impact on value.
They’re unsure what steps are vital and what can be ignored.
They're simply done with the property and ready to move on.
Being unprepared for a sale opens you up to buyers trying to negotiate a lower sale price. Don’t give them the ammo they need to drive the price down.
Put these steps into practice and you’ll have a much easier time getting investors excited about the opportunity, resulting in the best deal possible for your asset.
Get Your Rent Roll and P&L in Order
The rent roll and trailing 12-month profit and loss statements are the first things most investors look for when evaluating a property.
I’ve seen sellers jot down their rent roll from memory on a legal pad or provide estimated monthly expenses without proper records of recent repairs or capital expenditures. These unorganized financials don't inspire confidence. They create uncertainty, and uncertain buyers either walk away or discount their offer to protect themselves.
With clean financials, investors can’t object due to “uncertainty in the numbers.” They’ll clearly see the financial position of your property, allowing them to ask more specific questions and proceed to further analysis rather than disregarding the opportunity.
Four Ways to Get Your Financials in Order:
Hire a bookkeeper or accountant to track your property’s accounting months or even a year ahead of a sale.
Hire a property management company that can generate rent rolls and operating statements.
Start tracking your asset’s operating financials using property management software.
Create your financials using the templates provided by MFI Realty Advisors.
Having a clean, detailed rent roll and P&L is critical to maximizing the value of your transaction.
Prepare Relevant Documentation
After reviewing the rent roll and P&L, buyers will want further documentation to understand the property better. Common requests include:
Tax statements
Utility bills
Insurance policies
Concession and delinquency reports
Summary of contracted services
Age and condition of the roof, windows, exterior, parking lot, and HVAC systems
You might not have all this information handy, and that’s okay.
The key is to provide as much as you can. More information is better. Missing details don’t inspire confidence in the buyers which can lead to lower offers or price renegotiations during the contract phase, potentially causing your deal to fall apart.
Providing ample documentation reduces buyer trepidation and presents your property as a well-cared-for and well-managed asset.
So, track down relevant documentation ahead of time so you don’t have to scramble when buyers ask for information.
Prepare the Property
Investors usually want to tour a property before making an offer. Ensure the property is in good condition for these tours.
I’m not suggesting you spend tens of thousands on renovations, but simple cleaning and touch-up work can make a huge difference.
I learned this the hard way. I once lined up tours for a property without advising the seller on how to ready it for the buyer’s eyes.
It was in good condition with no major deferred maintenance. But, the dumpster was overflowing, garbage was scattered, and common areas were dirty and smelly. Even though these are easily addressable issues, the buyers felt the property was unkempt.
An afternoon on-site cleaning the property could have led those buyers to a different perception.
I now guide sellers on how to prepare for tours. Simple steps like mowing/snow removal, cleaning the grounds, sweeping the laundry room, and vacuuming the common areas can make the property feel well-managed rather than sloppy.
It’s about the psychology and perception of the asset’s condition. Buyers often get 30-60 minutes at a property before making an offer. Make sure their first impression is a good one.
A well-presented property reduces buyer objections and encourages compelling offers.
Follow an Organized Bidding Process
Now you have clean financials, clear documentation, and a tour-ready property.
But, there is one more thing you can do to ensure you receive full market value in your sale.
Organize the bidding process.
What do I mean by that?
Making buyers follow your process for submitting offers gives you an edge in the negotiations.
Here is how.
Distribute the same information to all interested parties.
Conduct tours systematically - schedule on pre-arranged dates, plan the walk-through, have answers to common questions prepared, etc.
Schedule a due date for offers to be submitted.
Counter all offers based on feedback on the call for offers date.
An organized process not only reduces headaches from disparate questions and random tours but also gives buyers a clear path to making a decision. Motivated buyers will rise to the occasion, while tire kickers will be kept at bay.
By following these steps, you’ll be well on your way to attracting serious investors and maximizing your results in the sale of your apartments.
