Are you considering selling your multifamily property? If so, you should know there are two types of buyers for your property and they differ in how they approach a purchase. The first potential buyer would be the owner occupant buyer. This person plans to move into the property after purchase and use the home as his primary residence. The 2nd buyer is the investor. The investor is buying your property for investment purposes and will likely keep your current tenants or rent the property to new tenants. As a multifamily seller it’s important to understand the differing mindsets and resources of these potential buyers. Understanding their wants and needs will allow you to better prepare for the sale and maximize your price received. Let’s take a look at both buyers in further detail.
Owner Occupied Buyers:
- This buyer plans to purchase your property as their primary residence tends to be a bit more emotional in their decision making. This can be good or bad for you. If your property shows well and seems to attract lots of attention during initial showings, buyers may jump to make the purchase before someone else does and ultimately pay more than they would have without the appearance of competition. The opposite is possible as well. If your property doesn’t receive much attention, this buyer will automatically assume “if no one else is interested, there must be something wrong that I’m not seeing”.
- Owner occupant buyers will obviously need a vacant unit at the time of closing. If you have all tenants on long-term leases you will not be able to secure this type of buyer. Some owners prefer to wait until there is a vacancy within one of the unit before they put the property up for sale.
- Owner occupant buyers tend to pay more than investors. Their purchase is more about whether the property suits their particular needs and less about cash flow numbers. Owner occupant can often receive better financing at lower rates than the typical investor. This is another factor contributing to their ability to pay a higher price for the same property.
- Real Estate investors tend to be less emotional in their decision making. They are buying your property for investment purposes and the financial must make sense for them to make a move. A good investor would rather miss a good deal than to buy a bad one.
- Investors are looking at your properties cash flow and return on investment. To land a good investor for your property you will want to show that you are achieving market or above market rents for the area and that your expenses are relatively low compared to other investment properties. It’s a good idea to keep strict records while you own the property so you are able to show these to potential investors at time of sale.
- Investor buyers can often buy your property “As Is” and can close quickly compared to owner occupied buyer. If you have a property in need of heavy work, it may not qualify for owner occupied loan programs. In this case you will need an investor to step in and buy the property. Investors also have money that is more readily available allowing them to close on your property on a short timeline.
Interested in selling your home or investment property? Call us today at 617-297-8641.