When it comes to selling your property for the highest price, first impressions can make all the difference. This can make life difficult if your multi-family investment is in need of multiple repairs and money is tight. In many cases, repairs or changes to the appearance of a property is affected by a cost vs. value approach. Is the fix going to make the property worth more in the long run? Will simple inexpensive fixes give the right impression? These are all potential factors that can add stress to the sale of your investment. Luckily, the brokers at ACI can help you focus your fix to the right places. So let’s Ask ACI to consider this scenario…
Finances for an investor to renovate their San Diego multifamily property are tight and work is needed on the roof, interior flooring, and parking area. If the investor is looking to sell or exchange their property in the future, which project do you think should take immediate priority and why?
Chuck Hoffman, President and Broker of Record at ACI Says:
Fix the roof first or expect additional costly repairs resulting from not repairing the roof. The possibility of a mold problem increases when there are active water leaks. Mold can be costly to eradicate and possibly subject the owner to a lawsuit.
Dave Savage, Director at ACI Says:
If the sale is your primary goal then you should focus on fixing the parking, since this is the only one of the three choices that investors will see. Overall, the roof will end up being the most important.
Keith Courtney, Principal at ACI Says:
When an apartment owner is ready to sell their building it is always a good idea to make the property look as attractive as possible to potential buyers in order to obtain the highest price. If painting, new roof and other major capital improvements are not in the budget there are smaller cosmetic items an owner can do. The property should be clean with trash picked up, parking and courtyard areas swept or even power washed, tenant vehicles operational and tenants’ personal items removed from balconies or other areas visible from the street. Minor landscaping work should be done with dead plants, trees and weeds removed and new bark and colorful flowers installed to give the “pop” in curb appeal to make a good first impression to potential buyers. If it’s been a while since the building has been painted, the building exterior could be power washed and if necessary some areas of stucco could be touched up with paint. Wood trim tends to deteriorate quicker than stucco, so painting just the wood trim will also improve curb appeal and could give the appearance the entire building was painted. An interior inspection of each unit should be made to identify if there are any active plumbing issues and how well the tenants are maintaining their units. A quick look in the kitchen, bathroom and bedrooms will give you an idea if you need to give a tenant written notice to clean certain areas, or clear out excessive personal items (hoarding). By doing the low cost items mentioned above will help an apartment owner achieve the highest price and also may reduce the chance a buyer will back out of the transaction, or ask for a large credit.
Terry Moore, Senior Vice President at ACI Says:
Generate revenue first and converse second. Patch roof and slurry sela parking lot. Upgrade the interiors to generate more cash flow. Improve cash flow can enable more upgrades later.
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