Buying and selling apartment buildings can be incredibly profitable. What factors are the most important for a speedy and profitable turn around?
1. Property Performance
General property and cash flow performance is probably the biggest factor. It will greatly impact the value and how your end buyer can structure the deal. If you’ve entered a new build or value add opportunity, the best value can typically be extracted after 6 to 24 months of proven performance.
Have you been leasing at market rents? If you want top dollar for your apartment building be sure you have been leasing at the best rental rates. Whether there are local rental caps can be a factor as well. Of course, expenses will play a part in true profitability, but experienced operators will be able to see the potential for cost savings themselves.
3. Occupancy Rates
Apartment buildings with high vacancy rates can be good for those seeking distressed acquisitions at discounts. It makes it easier to renovate units and lease at market rents too.
4. Property Condition
If you are flipping this property to an investor focused on buy and hold, they are looking for a well-oiled building that doesn’t have any major maintenance and repairs outstanding. Being able to find and manage great contractors well will make all the difference on your end
What is the availability of capital for this asset class right now? Note that this is a very good time for multifamily lending, with life insurance companies pledging to increase their stake in the market by billions of dollars over the next few years, while others like Blackstone are raising new record sized multi-billion dollar funds.
What is your online reputation? What do online reviews of this property tell potential buyers?
7. Market Conditions
In addition to the broader outlook and general sentiment how are market conditions impacting your area for better or worse?
Don’t forget taxes. It’s all about what you get to keep. What vehicles can you use to defer and minimize taxes and reinvest the maximum possible.