If you’re selling an apartment building, you’ll need to price it right. Of course, this is part of the overall strategy to find commercial property buyers. Much like with selling anything of value, you’ve got to know what justifies the price. If you don’t know or are unsure, you’re sabotaging yourself from the get-go. Basically, the selling process begins with the right valuation.
Apartment Building Pricing Strategies
To find the right asking price, you’ve first got to know the local market — what other comparable properties fetch. So, look for comparables. Now, this won’t be a simple task. After all, commercial real estate is far different than its residential counterpart. But, if you work with an experience apartment building specialist, you can obtain this information. Next, you’ll need to factor in those transactions biggest selling points.
Determining the value of an apartment building investment is one of the greatest difficulties that many new commercial real estate investors face. However, commercial real estate investors and appraisers use a variety of appraisal methods to determine the fair market value of an apartment building. —Bigger Pockets.com
Determine what makes them worth the price and compare them to your own. Also, don’t forget to include previous improvements. If you’ve made upgrades, those do usually add value. You’ll need to determine the contributed value. With just a few other factors, you can come up with a legitimate selling price.
Top Apartment Building Pricing Factors
Okay, so that’s a basic overview of how to come up with a realistic listing price. But, how do you know the price is or isn’t aligning with the local market? In other words, what causes one apartment building to be worth more than another? Well, these really come down to a few fundamentals. Here are the biggest apartment building pricing factors:
- Location. This should come as no surprise. Location is everything. The more desirable the location, the better. If it’s near the water or close to downtown, it’s value will reflect it. Of course, if it’s away from desirable locations or is surrounded by new construction, those will likely be negatives.
- Number of units. Here’s another obvious factor — the number of units. Not surprisingly, the more units and the higher the on-time rental payments, the more value. A complex with three-hundred units is generally worth more than a complex with fifty units.
- Amenities. We’ll add another all-too-obvious factor to the list and that’s amenities. Here again, the more and the better condition the amenities, the more the entire complex is worth.
- Condition. Of course, condition is a huge factor in pricing. If the units are in good or excellent condition, along with the property and land overall, the more it’s worth. Conversely, outdated or lack of amenities are negatives.
If you’d like to learn more about commercial real estate investment benefits and more about the selling process, please contact me.