PALO ALTO (STL.News) – Investment in multifamily properties is one of the most attractive plays in today’s real estate market. For investors looking to exit the market, or perhaps execute a 1031 exchange, there are 5 things to remember before you sell according to Carlos Azucena, founder of CFA Property Advisors of Marcus & Millichap.
Price the Property Appropriately
The key to achieving the highest price is to generate enough demand to create a competitive atmosphere among buyers. Demand can only be achieved when a property is priced in-line with the market’s expectations. While there is little risk in underpricing when marketed effectively, an overpriced property can languish on the market and have buyers wondering what’s “wrong”.
Understand Market Conditions to Implement the Right Strategy
Understanding conditions over the last 12 months regarding prices, rates and rents is critical to executing the right marketing strategy. If rents are increasing, is the market pricing in the upside or is it basing value on in-place rents and income.
Decide Whether You Would Like to Complete a 1031 Exchange
A 1031 exchange allows you to defer capital gains taxes and by purchasing a “like-kind” property with the sales proceeds. If you are planning on doing an exchange, you will need to have a competent exchange accommodator as part of facilitating the transaction to meet IRS requirements.
Take Steps to Maximize Value
Low-cost curb appeal fixes such as landscaping or touch-up paint can help the desirability of the property for investors who are looking for pride of ownership. To take it a step further, you may want to renovate a unit to achieve a higher rent to demonstrate “proof of concept”, thereby showcasing upside income potential.
Find a Specialized Real Estate Agent
An agent that specializes in apartment sales can educate you on all the factors above and is critical to your success. Find an agent with significant resources and experience. You’ll want to avoid using single-family agents as their lack of expertise in underwriting and understanding the investor profile can diminish your chances of achieving the highest price. You wouldn’t want to go to a dentist for heart surgery!
Carlos Azucena is a real estate broker with ~15 years of experience in apartment sales. He serves the San Francisco Bay Area and can be reached at 650-391-1746 or [email protected] Find out more at www.cfapropertyadvisors.com.