Selling versus Refinancing a five unit multi-family

[Lisa Cutshaw]

I'm curious to find out what criteria experienced investors use when deciding whether to refinance or sell a multi-family property. I saw a few older posts along similar lines, but nothing recent. I have a five unit multi-family property in Maine that I've been rehabbing for the past year. This spring I'm planning to either sell or refinance, and I've got feelers out to run the numbers on each option. When do you decide to sell rather than refinance? If you sell, do prefer to use a broker, an auction service, or try to sell by owner? Thanks in advance for any replies!

[Simcha Davidman]

Hi @Lisa Cutshaw and welcome to BP!

A good rule of thumb is to assess your return on equity. Even after you refi, you're still sitting on approx 20-25% equity sitting in the property. What will your return on that equity be, if left in the property or if you sold it and put it somewhere else?

As far as  how to sell it, it depends on whether you have the time, resources, connections and desire to spend selling it, or whether you want to give this over to a professional. The last couple of auctions I've monitored all went for less than the seller was expecting. That is probably highly dependent on the market and property, so I can't really tell you to do or not to do it.

Good luck!