Selling Oakland 4-plex right now - good/bad market?

Question

Hi all, I'm looking for some impartial but knowledgeable opinions on if now is a good time to consider selling my 4-plex. I can only find market info on SFH (prices up), condos and rents (prices down), but not much data on 2-4 unit buildings (list vs sell, days on market, demand, etc.).

Mine is/was owner-occupied, I'm moving, so that's one unit vacant, and I already had another unit open. I'm not sure if it's best to leave these two vacant if I list or try to rent them out (and still possibly list in the spring). I'm wondering if the quieter rental market is softening sales for buildings like this, or are there still investors wanting to buy knowing things could possibly be busier next spring/summer, plus with two open units, they can do whatever improvements to reset the rental prices (owners unit could fetch 2500-2800, other units 2200-2400).

This is in the Longfellow neighborhood, 10 min walk to BART, 15 mins walk to Temescal, and close to Emeryville (Target, Home Depot, Pak N Save) in case you'd like to weigh location into your reply. I also renovated it when I bought it 6yrs ago (mid tier rental stock, white appliances, no in unit laundry and no laundry on site, no DW - except owners unit which has SS appliances, laundry, DW, upgraded fixtures, etc)

Angelou Masters · Answer

Yeah they city council will be coming at us full force and they plan on implementing TOPA which is another good reason for selling.  The would never categorize Albertsons, Safeway,or a super Walmart with a guy that owns a local neighborhood store but they throw the mom and pop landlord in the same boat with these major corporations and hedge funds. I just can’t get over how greedy and evil they try to make us seem  for providing a necessary service. The city should build thousands of units and rent them out at cost, oh I forgot the city doesn’t way to be in the rental business the prefer to dictate all the rules and have no skin in the game like mostly all of the city council members except maybe one. Now is a great time to sale..

Nicole Nichols · Answer

@Hayden Hsu i dont think there's interest in short term right now, between people not wanting to move around a lot due to covid and the lack of people flowing here for jobs due to remote, i don't see a market where people would need/want interim housing for 3-6 months.

the property has always cash flowed for me when all 3 units are rented, i got it at a great price, so i'm not desperate to sell. overall, i'm just not keen to continue as a LL in Oakland - too much risk. I've been lucky to have no issues with tenants but I know the moment I do, it's a losing battle out here.

Joe Bertolino · Answer

Did you end up selling it?

David Lao · Answer

@Nicole Nichols

With interest rates so low, I think it’s a good time to sell. You only need to wait 1-2 months before spring time. The seasonal effects on sales price might be worth considering, but with the pandemic and shelter-in-place going on, it’s hard to say for sure whether the seasonal effects would be as prominent this time around.

Graph of prior local sales price by month (for a house.. I couldn’t find one for a 4-plex):

https://cdn.filestackcontent.com/bWGge43Q24HesKmml0dA

Source:

https://www.bayareamarketreports.com/trend/oakland-berkeley-real-estate-market-conditions-prices?fbclid=IwAR0VP6yBDAmZ6iobj_83S0C-FVoHAn32Kg-kr4Y1uVrapqQYboQo_8Lr5Ss

I’m in West Oakland. DM me if you’d like to connect in real life.

Brian Garlington · Answer

Inventory is VERY low right now. You should be able to get top dollar.

Ori Skloot · Answer

I like @Hayden Hsu advice.  Sounds like a reasonable strategy. The downside is I think it may take some time for remote to start picking up again, so it depends on your time frame.  I think the market for a 4-plex in your area is still strong and that you will get a good price (if you do go to market, definitely leave the two units vacant and let the new landlord pick the tenants).   It also depends on what you want to do with your proceeds once you sell.  If the plan is to house hack into a better neighborhood/ property or purchase other investment properties with higher ROI, then it could be a good time to sell

Hayden H. · Answer

If you are trying to sell for the highest price I don't think now is the best time to sell. With 2 vacant units, it looks nice on paper but the next owner will realize they cannot evict anyone for probably the next year with COVID-19. Since all investors know this along with pretty steep rental price drops (1 month free rent, 10-20% decrease in rental price is now pretty common), you may not get the price you are looking for. I would first confirm rental prices on Zillow to see if there is any interest, you may be surprised to find there isn't any since inventory is so high since everyone who can is moving out. However, if you do sell, I think you would get a higher price from someone like you who is house hacking. Personally, I would see if you can do a short term rental and hire someone to manage, that way you dont have to worry about no eviction and can get the unit back on the market to rent when rents go back up.

Nicole Nichols · Answer

@Angelou Masters that's actually one of my reasons i'm considering selling, this area has become so anti landlord that they are putting small-time/independent landlords at risk.

Angelou Masters · Answer

Now is still an excellent time to sell. I would sell with two empty units and that would give the new owner the ability to pick his own tenant, do some remodel projects , and be able to choose a rent amount that will work for him. Also with Carroll Fife Being voted in as the newest Oakland city Council member the deck is now stacked against landlords and we will now feel the effects of a full court press.  The city council now have 4 very staunch tenant rights advocates on board with decades of experience in that field and they have vowed to swing the pendulum all the in favor of tenant.....

Selling Oakland 4-plex right now - good/bad market?

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