Selling a Package of Multi-family Buildings?

ejalbk, I am looking to purchase a couple of mult-family buildings in Bed-Stuy, Bushwick, and Clinton Hill.  Depending on the deal I can pay all cash.  Please contact me at 888-278-6507 to discuss, thank you.

hcmdr5

in Real Estate - Sales 13 years and 4 months ago

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ejalbk | 13 years and 5 months ago

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My partner is going to sell several multi-family buildings this year (I have a small minority interest). Several questions come to mind before he lists with a broker: Is it better to sell the buildings (5) as a package or individually? The package logic would be that the buildings are of differing quality and whereas the less desireable buildings may not generate much interest, the nicer buildings will and in order for the buyer to get the good, he/she needs to take the not so good with it.  Any experienced opinions on this? Do buyers of multi-families geberally prefer several vacancies so they can get their own tenants or do they normally prefer a 100% rented building? If it’s 100% rented, should he max out rents on renewals on free market apts between now and then (something he normally doesn’t do for various reasons) or are buyers generally savvy enough to know that something may only be rented at 90% of market, but understand they can boost the rent and value it based on market rent instead of the sub-market actual rents? Finally, has anone had any experience with 1031 triple-net exchanges either good or bad? Thanks in advannce…

BigGuy22 | 13 years and 5 months ago

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Hey, Im a broker. I have experience in selling multi family buildings all over the city. In my experience your better off selling each building individually. Package deals are great, if your selling at an extreme discount. If you are looking to maximize profit then sell them each individually. If they are mutli fams they’ll generate interest no matter where they are as long as they are priced right and the investor can make money each year on it. Most multi fam buyers want the building to be as vacant as possible, especially if the tenants are program. It costs on Avg 10k per tenant to evict them and theyll factor that in to thier offers, so like I said the more vacant the better. if its 100% rented I’d max out. Why? because investors will look for any excuse to offer you less, they are #s people they want to see it in black and white, not what could be. Thats up to you though. 1031 exchanges are pretty awesome…you’ll save a ton on taxes. As long as you were going to take the money from the sale and invest back in to real estate anyway your best bet would be a 1031 exchange…but talk to your accountant and an attorney 1st. If you have anymore questions or concerns you can feel free to call me at 347 702 3316\.

Bklnite | 13 years and 4 months ago

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Better to sell individually. As noted above, sell as a package if you want to offer a steep discount becasue you need to sell quickly or need to have all 5 buildings sold at once. A package of adjacent buildings makes sense. Not so much for buildings in different locations.

Vacancies are better than under market rents because a new owner may be able to renovate and will be able to get closer to market. Fully occupied with good tenants paying market rents is better for an investor looking for stable cash flow. If there are vacancies or below market rents, brokers will often market a pro forma with higher potential rents, which may reflect some investors valuations. Bank underwriters will be primarily concerned with the actual income, and a higher income will translate into a higher maximum loan size.

I’m looking for a multifamily (one building, not a package) and would love to look at the address and rent roll of the buildings and see if I can make an offer on one of them that your partner would consider before committing to a broker. If interested please email me at bklnite@gmail.com

Bklnite | 13 years and 4 months ago

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My only experience with 1031 exchanges was being outbid on an apartment building by a buyer who was doing an exchange and needed to complete a purchase in a specific time frame. My understanding is you need to have proceeds held by a qualified intermediary; identify new property(ies) within 45 days; and buy the replacement property within 180 days to defer taxes with a 1031 exchange. If you wanted to sell 5 properties for $1 million each and buy a new property for > $5 million you could do a 1031 exchange but meeting the timing requirements would be tricky. You could have contracts written to allow coordinating multiple closings so the timing would work. Best to consult your accountant, tax pro, and/or attorney.