Multifamily homes, especially duplexes, are popular starter homes for young investors, but eventually, everyone moves on, and that’s when it’s time to sell. Selling a multifamily property, though, is a little different from selling a single-family home; buyers may be fellow investors, families that want to share a home with older relatives, or those casually dipping a toe into the rental market. And if you’re going to get the most for your property, you need to be selective in who you sell to.
Before you sign over your multifamily property to a new owner, you need to assess the current rental market so you can time your sale right. Wait for a seller’s market and get to know the potential buyers. Selling your property is the first step toward your next investment adventure.
Know Your Region
While the housing market is vulnerable to national economic trends, most areas also have local patterns that dictate home sales. In Katy, home listings peak in the Spring and homes listed during that season are more likely to sell above list price. Local economic development also influences local home sales. Katy has recently seen a spate of new commercial development that is expected to drive jobs and tourism and could increase sales rates overall, giving you an advantage.
Unlike some areas, Katy’s climate means there’s no bad time to move, though most people prefer to avoid moving during the hottest weeks of Summer and early Fall. The mild Winter months, however, are ideal for a comfortable and convenient move.
Rethink Your Renovations
If you’re hoping to attract investors to your multifamily property, hold back on the new renovations. Investors typically want properties they can make money on by making cost-effective improvements, often referred to in the industry as value-added opportunities. The problem is, there are fewer added value opportunities out there lately – everyone is renovating their properties before they bring them to market. While families planning to buy the property for personal use don’t want to invest all that extra money and time into making improvements, investors know they can make more money by upgrading the property themselves.
On the other hand, if your property is already in great shape – maybe a change of personal circumstances means you’re leaving the real estate world behind – then selling to a family is the way to go. While everyone wants a good deal, individual buyers are more likely to seek out a turnkey property and pay the full price for it.
Focus On The Finances
Any experienced investor who views your multifamily property is going to have several questions about the history of your rental, particularly its financial history. As you prepare the property, then, be sure to create a due diligence package for interested buyers. If they intend to buy the property as a rental investment, then they need to know the home’s financial history, what the utility bills are typically like, and recent renovation information. All of this information goes into determining whether a property is a good choice for the buyer’s investment portfolio.
Those buying such a property for personal reasons won’t be interested in these documents, but you won’t want to be scrambling for them at the last minute. It can be difficult to prepare for two very different types of potential sales, but extra information can only benefit the future property owner – and help you feel better prepared for showings, marketing the property, and talking to potential buyers more generally.
Address Existing Tenants
Telling your tenants, you plan to sell their home is a tough situation, but unfortunately, you can’t even begin putting the property on the market until you speak to the tenants. Given advanced warning, they can then arrange for new housing in the event the buyer does not maintain their lease.
Similarly, if you’re selling to an investor who plans to take over as landlord, you need to take responsibility for your existing tenant. That means, if you have a problem tenant, it’s time to evict them or time the sale so that their lease ends before the sale is complete. It’s one thing for you to deal with any difficulties caused by a troublesome tenant, but you shouldn’t pass those issues on to the next owner. If you’ve got a great tenant, of course, it’s good for both that tenant and the new buyer if you can bring them together.
Plan Your Next Steps
You’ve decided to sell – but if you’re going to drop a major investment from your portfolio, you should know what you plan to do next. Will you use these funds to invest in single-family homes, which are often easier to manage? Or do you plan to invest the proceeds in a bigger home for your family, in stocks, or save it for a rainy day? While there are countless different things you can do after offloading one or more of your investment properties, you should have a path in mind before you jump ship.
The problem with eliminating a key investment before you make a plan for your next move is that the money tends to disappear. It gets spent little by little until you no longer have the proceeds of the sale. The plan should come first, then the sale, to protect your funds.
Are you ready to sell your Katy area multifamily home? It’s a seller’s market, particularly as Katy continues to expand, so you’re bound to get a good deal for your property – but don’t stop there. Take an interest in what’s next for your property, even if you’re moving on, and connect the new buyer with Green Residential.
The Green Residential Promise
Born in Houston, the Green Residential family serves many surrounding cities, including Katy, and our property management team can help new owners make the transition, taking over former tenants, marketing the property, and seeking out new ones. For more information on how our property management services can help care for your Katy property, contact Green Residential today. You may be selling, but this property is part of your history. Ensure its future is as bright as its past – with Green Residential.