Broker Sound Off: Should you sell your apartment investment before the end of the year?

Broker Sound Off: Should you sell your apartment investment before the end of the year? 

Our brokers are answering many calls asking if now is a good time to sell. We talked to Kyle Sissell, Danny Mantis, Matt Halper and Andy Friedman and asked their advice for multifamily investors considering selling now versus in 2021. We’ve helped gather several key soundbites below that are great reminders for any landlord in today’s climate. 

Broker Sound Off: Is Now The Time To Sell? 

“For anyone considering selling, there is no time like the present. As far as values go in the time of COVID, I’m not changing my valuation techniques due to COVID. Meaning, that I’m not seeing a systemic shift in the multifamily market impacting values,” said Danny Mantis. “Anecdotally, I was talking with an appraiser recently and he agreed. Perhaps minor tweaks can be made to cap rate, vacancy/collection loss, or rent projections, but based on what has taken place in the multifamily space thus far in 2020 there is no reason to become more conservative in all three of those areas.”

“An owner should consider selling now versus 2021 for multiple reasons, the first being that values haven’t yet been impacted by COVID. In my market area of Northwest Indiana, multifamily listings are scarce, resulting in a lot more potential investors circling deals. Other commercial real estate sectors are strained, creating a divergence from the office and retail segments – into a property type that is more stable and sound such as multifamily,” said Kyle Sissell. “This combination creates a competitive market around your property.”

“Apartment building pricing remains quite strong in Chicago as of now, but if distressed deals come to market they will attract investor attention, to the detriment of “healthy” building sales,” said Andy Friedman. “For this reason, now may be a better time to sell a property.”

General Advice: Talk To A Multifamily Broker

If you haven’t spoken with a multifamily broker who is active in your market area or with your product type, now is the time. Brokers are tuned in to what is happening with rent collection, values, cap rates, lending and more. A broker can also help you hone your own operation.

“At Kiser Group, we consistently provide rent studies and market analyses to many of our clients to help them make the best decisions for their business,” said Andy Friedman. “Many people don’t understand that we can be valuable even when they’re not selling or buying. It’s simply a part of what we do.”

Ask Brokers These Questions 

In today’s multifamily market, be sure to ask your broker the following questions:

• What are you hearing in my market? 
• Is there recent news that can alter the value of my building?
• Do recent rental collections alter the value of my building?
• Should I consider updating the property or my units to achieve top of the market rents before selling?

“Initially discuss your long-term goals with trusted advisors,” said Matt Halper. “If selling your apartment building now is part of your long-term goal, hiring a qualified commercial real estate broker can help you achieve your goal, and they will help you work through ever changing market conditions.”

Keep Your Books Up To Date

“Having an up-to-date rent roll or P&L allows a broker to work diligently through the numbers and determine the value of the property.” – Kyle Sissell

“One thing I recommend to owners that are listing their property in the near term is to prepare good books and records and keep them up-to-date throughout the marketing period. Both buyers and lenders are scrutinizing property operations,” said Danny Mantis. “While I don’t see an impact on values, deals are taking longer to get done. Keeping good records will help get lenders comfortable with a deal quickly, and help keep buyers on the agreed upon closing time frame.” 

Kiser Group provides multifamily expertise to help our clients maximize value in their Chicagoland real estate investments. Learn more about if now is the right time to sell at https://www.kisergroup.com/project/sellers/.