Best Way to Sell a Cash Flowing Apartment?

Question

Hi All,

In the past 10 years, I've had a very good niche' buying foreclosed properties from banks and rehabbing them and turning them into rentals.  It's worked out very well and I've learned a great deal along the way about landlording and rehabbing. I love the strategy, but I'm ready to focus on solely large multi-unit properties.

As a result, I'm curious the best way to begin selling my smaller condo units to other investors.  Typically they return around 8% cash on cash (over 20% ROI if using bank loans) and are fully stabilized in very good neighborhoods (B to C grade) in Monmouth County NJ, specially Oceanport.

For so long, I've only been focused on buying and building a portfolio that I don't really have good experience in selling efficiently to more passive investors, who aren't fully time like I am.

I'm opposed to using the MLS just because I really like my tenants and I promised that they could stay as long as they liked.

I would appreciate any tips, in selling "turnkey".

Thanks!

Jonathan Greene · Answer

@Mark Gee in reference to keeping them off the MLS. You are now selling your investment properties, renovated and ready, with tenants and a solid rent roll, to basically, you. You know from being a savvy buy and hold investor that you want to buy in at a discount, even for a ready-to-go property. You will be limiting your scope to make more money by trying to sell it off-market. I understand you want to protect the tenants, but you make it clear to the agent that the unit is being sold with leases.

Put it this way, as a buyer, you want a deal. As a seller, you want maximum exposure to the most potential buyers of the property you invested in. To do that, you have to be on-market and the property must be hyper-marketed to the right clientele. An investor-friendly large unit agent knows just who to go to and how to market this. The truth is that you will achieve your highest price on the market to investors not as savvy as you and many of us on BP. Turnkey properties can of course achieve more, but still your highest price will be found with more eyes on it.

Michael Henry · Answer

If and when you put it up on MLS, let the tenants know that you are going to be putting the units on the market and because there is a lease in place they have nothing to worry about. All shows will be giving 24-hour notice and potential buyers will be vetted prior to walking through.

MLS listing, public remarks: proof of funds required prior to showings and many sellers requests that present during all showings.

If you have a good product you are leaving money on the table when you are not using MLS unless you have connections to retail buyers. It seems like there is a market out there for your product retail investors but many times it seems BP investors are looking for great ROI.

MH

Eric V. · Answer

Mark,

I am local to the area and looking to get my first investment property. I am very familiar with the oceanport area as well if you want to send me some of the properties I can take a look at.

Mark Gee · Answer

Thank you for your insights @Jonathan Greene.  You guys bring up a valuable point and I'm definitely considering the MLS as a exit strategy (to maximize profit).  Everything you guys illustrated makes a ton of sense.  I will keep you updated if I go that route.  Thanks again.

Matt Faix · Answer

@Mark Gee Talk to a broker. They will have relationships with other investors looking to buy, and you can sell everything as a portfolio. Also, you can only promise the tenants what is in the terms of the lease. A new owner may decide not to renew, raise rents, not allow pets, etc

Mark Gee · Answer

I've just now listed this Oceanport NJ (Monmouth County) investment property on the MLS.  https://www.realtor.com/realestateandhomes-detail/...

Its a great unit.   Existing tenant pays $1750 and can stay or go. Month to month lease.  The floors in the Kitchen, LV and hallways were recently upgraded to CoreTec Plus Vinyl Plank to enhance durability and give it a more updated look:

Mark Gee · Answer

Thank you @Mike Ventura.  It's a really nice place.

In my opinion, its become more difficult to buy foreclosures in NJ right now b/c institutional capital has recently started competing with common investors like me.  I've been outbid on 20+ deals in a row and I don't think its because I'm bidding too little.  People are putting big money to work and paying up for that honor.

Stick with it Mike.  Persistence and action are vital so just keep making the necessary calls everyday and doing your DD. Keep up the hard work and get at least one deal under your belt and it will teach you a ton!  Its really not glamorous work, but its a lot of fun when you're stubborn & finally get what you wanted!

Mike Ventura · Answer

@Mark Gee The property looks fantastic, I wish I had the funds to do business with you!

I'm curious to learn more about your foreclosure acquisition strategy. I've been pulling teeth trying to get a foreclosure from Wells Fargo (8 months now). Granted I engaged with intentions to buy the home as a primary residence so I'm trying to get WF to cover some repairs.

I'm in Warren County and there are a ton of foreclosed properties up here. What do you find are the most important steps/actions to successfully acquiring a foreclosure in a timely manner?

Mark Gee · Answer

@Rohan J. Seller financing is just the act of the owner/seller (me in this scenario) providing the financing for the new buyer.  So I could potentially sell the place for 20% down, and monthly payments of 6% on the balance.

With rent to own, there would need to be an agreement beforehand with the tenants where they would have the option to purchase the place for X dollars in the next Y years.  Sometimes a portion of the rent can reduce the buyout price over time.  So the longer you rent, in theory the less the purchase price will be.

@Dejan Davidovic Thanks Dejan, feel free to send me a direct message if you are serious about the place.  I will list in the marketplace this weekend.  Cheers!

@Wes Brand The only issue with carrying the note is I'd rather use the equity to 1031 into another property.  Thanks though, it is a great idea at certain times.

Best Way to Sell a Cash Flowing Apartment?

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