Apartment building sellers usually see a few obstacles in their quest to find interested and able buyers. We’ve already spoken about the bases of commercial property selling. But now, let’s take a quick look at how to find real buyers. Of course, this differs greatly from selling a private home. For one thing, there is no MLS. So, you must use other methods to find motivated buyers for an apartment complex.
Biggest Apartment Building Selling Challenges
In case you missed it, the paragraph above eluded at least twice to one of the biggest challenges of selling commercial real estate and that’s honest, able buyers. You’ll soon discover through the process there are many tire kickers. They seem eager and willing enough but don’t actually follow through. It’s an unfortunate part of the process, but a reality, nonetheless.
Apartment buildings frequently get sold on the basis of their cap rate, which is effectively a multiple of the income they produce. If you increase your building’s income by raising rents or cutting expenses, you should be able to sell for a profit. When you sell in a better market or improve the quality of the building, buyers may be willing to buy your building at a lower multiple of earnings, giving you additional profit. —Houston Chronicle
Then, there’s the matter of finding qualified individuals or investor groups. Sure, they might look the part at-first. However, as you go along you find they don’t really have the means. Sadly, that brings up yet another challenge, finding a buyer who’s got it all together and ready-to-go.
How Apartment Building Sellers can Find Buyers
Now, it’s not all bad news. You can sell an apartment property — it just requires some strategy. So, let’s take a look at how apartment building sellers can find buyers:
- Partner with an experienced professional. With so much at stake, you shouldn’t even attempt to go it alone. (Which you probably already know.) Teaming up with a commercial real estate pro is key. Not only to handle the transaction but to tap into a network of possible buyers.
- Look to your professional relationship network. If you have a network of professional contacts, take some time to go through your list. See if there’s a potential candidate or more you can reach out to start marketing your apartment building.
- Reach out to known apartment building buyers. Another way to go about selling an apartment building is to find previous buyers. (A local commercial broker or agent is a great place to find potential buyers.)
- Advertise privately with plenty of hard stipulations. In residential real estate, there’s a marketing strategy called “pocket listings.” Basically, the listing agent doesn’t put the property on the MLS and instead, privately spreads the word to targeted individuals. You can take much the same approach to find apartment building buyers.
If you’d like to learn more about commercial real estate investment benefits and more about the selling process, please contact me.