While we focus on NOI and Cap Rates when buying apartment investment properties…we still pay close attention to curb appeal…that’s part of what attracts potential tenants. With that in mind, when preparing to sell a multifamily property we want the grounds to look the best they can without breaking the maintenance budget. If you can’t afford to do everything, do everything you can.
PHASE ONE: Before listing a multifamily property take a walk around it with a different focus. Try to looking at it as you would a plane when you board. The psychology of safety is that when things look messy, ill planned or in disrepair, we perceive that higher risks are present. To ease traveler’s fears airlines strive to have passengers enter a clean and neat plane. The multifamily analog is we stripe the parking lot so it looks sharp, prune tall bushes….particularly those near buildings. Mowing the lawn is a must. Adding colorful flowers to the landscaping is a good idea.
Create scenes, viewpoints that best displays the pluses of the property. The marketing photos and videos will use those to attract attention to the property. The financials will be what ultimately sell an investor…but the marketing images increase the odds of a buyer taking the time to look close enough to view the financials.
PHASE TWO: The first items that any investor or buyer’s broker will ask for is a Rent Roll and Profit and Loss Statement. Those need to be current and readily available upon request in electronic format. In this climate actual results must be delivered. Proformas…”the art of the possible” are acceptable…but only if real numbers are shown as well. That may be enough information for a potential buyer to submit a Letter of Intent (LOI), but that is only the tip of the research iceberg. In order to be ready to go to market, Sellers need to have the entire Due Diligence Package complete and ready for submission to the Buyer. Imagine that you are an interested investor that requests a complete package…only to be told that will be sent in a few days or weeks.
The best time to forward information requested in the initial interest phase is immediately. Delays create the impression of increased risk…higher perceived risk inherently reduces perceived value. Contrastingly, Sellers and Seller’s agents that anticipate questions and answer them in advance of their being asked create trust and value.
In my next article I’ll discuss everything that belongs in competent Due Diligence Packages…and how that package will vary based on the size of property.
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