In so many things, they say that timing is everything; that’s true for your multi-family investments too. In this episode of her blogcast series, René analyzes the situation and discusses whether now’s the time to sell.
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Patrick: Today, we’re talking with René Nelson, CCIM, a well-known multi-family expert and commercial real estate broker, about recently proposed changes to Oregon’s landlord and tenant laws.
René, do new laws mean now is the time to sell my multi-family investments?
René Nelson: I think so, Patrick. And here’s why. Here’s the signal that we’re watching. In our last episodes that you and I have talked about, we’ve talked about rent control. And I see fewer investors that are going to want to flock to Oregon to buy multifamily in the next year or two, while this rent control kind of shakes out. As a matter of fact, I think we’re gonna actually see a mass exodus because the owners that own multi-family now are going to be afraid that, down the road, if they go to sell, their prices are going to be impacted. And I’ve already had investors call me and say, “Ugh, get me out of the market. I want to sell my multi-family property.” So, definitely these new laws are triggering people wanting to get out of the market.
So what do investors look for when buying a multi-family property?
René Nelson: When an investor looks at if they’re going to buy a property, the first thing that they’re going to want to look at is how stable is the tenant base. So, how long have your tenants been there? Then, they’re gonna want to look at how well maintained is the property. Is there lots of deferred maintenance or is the property in pretty good condition? And then it really comes down to purely numbers. What’s the cap rate, can they get a good buy on the property? What’s the price per unit? So, it starts with good tenants, and how’s the property been maintained. And then, what’s the bottom line that they can buy the property for.
René, is there a good time to sell?
René Nelson: Well, in my opinion, the sooner the better—and here’s why. In residential real estate, a lot of those brokers will tell you, “Well, wait until the spring because you’ll have more activity and more buyers.” For multi-family, right now, given where we are in the market, I say now is the time to get a good value on your property. Talk to a broker. Find out what your property is worth and get it on the market, because as more people decide to get out of the market and put their property on the market for sale …
And there’s a lot of stuff, Patrick, that sells, that’s multi-family that you never see a for sale sign in the front because they don’t want the tenants to know the building is up for sale. So a lot of that stuff trades or sells without even it hitting the market. Most people don’t even know that apartment complexes are selling. But for the multi-family owner that now wants to get out, if four or five properties around their property have sold, that has just set the tone for what you’re going to be able to get out of value for your property. So, if you wait, and everything around you has sold, that’s just established your base price and you’re going see that in your bottom line, when you go to sell.
Patrick: That makes sense. Thank you, René. If you need more information, go to eugene-commercial.com or call René at 541-912-6583.
Again with timing being so important, keeping up with changes that impact your multi-family investments is critical. The professionals at Pacwest Commercial Real Estate are doing that for you with our regular blogcast series. Be sure to check back often.