Apartment building selling presents its own list of challenges. While some of these are relatively minor, others are bigger obstacles to overcome. If you are entering into the commercial property market for the first time or have come to a point when it’s time to exit, you’ll probably be looking for a bit of advice. That’s okay since there is so much to learn about selling (or buying) an apartment complex.
Biggest Commercial Property Selling Pitfalls Sellers Face
Before you get into apartment building investing, you should seriously consider your eventual exit strategy. After all, you’ll probably move on at some point. And, even if that’s not the plan, unforeseen circumstances could easily unfold. So, it’s very important to know the biggest commercial property selling challenges. Perhaps the largest obstacle is improper pricing. Over (or under) pricing only spells trouble.
Commercial real estate is cyclical, so it’s logical to expect a downturn at some point. But conventional wisdom holds that it won’t come soon. Although the commercial real estate market’s outlook is still respectable, should investors be deterred by a potential decrease in returns from investment properties in the coming years? —Forbes.com
Then, there’s the question of timing. Putting an apartment property on the market at a bad time will only cause worry and anxiety. Limiting the marketing is another mistake. You simply need exposure to successfully sell any commercial property. Inadequate contracts are also a huge problem, causing legal troubles galore.
Most Common Apartment Building Selling Challenges
Okay, so when you initially buy an apartment complex or invest in one, you should also know the largest challenges you’ll face when selling. Here are four common problems you’ll face when selling commercial property:
- Apartment buildings are complicated investments. This cannot be understated. Commercial property is a lot more complex than residential because it’s unfamiliar to so many people. You’ll need to be patient to find buyers who understand the process and more.
- Determining the true market value of an apartment building is difficult. There’s no way around this fact — it’s very difficult to accurately value any commercial property. Put simply, this isn’t as easy as finding one or more “comparable properties” since that’s a rare thing.
- Newly built or new developments present a real challenge to older ones. Another challenge you might face is new developments or recently built housing. Older properties are more difficult to sell when there are newer alternatives. At the very least, buyers will certainly make the comparison and that might present a real challenge.
- Financing an apartment building is not an easy thing to do for almost anyone. If you haven’t gone through this process yet, it’s not an easy journey. But, if you have, you already know, it’s not that simple. So, that will present another challenge — finding buyers who can actually follow through and make the purchase.
If you’d like to learn more about commercial real estate investment benefits and more about the selling process, please contact me.