There may never be a right time to sell; however there is many reasons to sell. These reasons may include exiting the market for good at the end of a long or short and successful career in apartment building ownership. Changing of generations and the next generation isn’t interested in the business. Upgrading your portfolio to larger and self-managing buildings. Change of mind about your desire for being a hands-on manager and ownership. These are only a few examples of the reasons and there is probably as many reasons as there are people.
The important part once the decision to sell has been made is to implement a strategy for selling and that strategy should include a timeline that fits your needs. You need to step back if you already haven’t and analyze why you are selling as this will affect the timing of the transaction and your next steps. Regardless of why you are selling you should look at the building from a buyer’s point of view and analyze your assets strength and weakness. There may be items you have been planning to repair or upgrade which should be completed before going to market. The question on hand is how you/we can maximize your value with the least amount of expense and in the least amount of time. Remember the market is prepared to purchase just about any building in any condition but the market isn’t prepared to over pay for any building in any condition. The rule of thumb when doing repairs and capital item upgrades is not to invest more in these repairs then the building is worth. This means if there are required repairs or upgrades and not enough time to benefit from the increased rents you may want to consider selling your building in an “As Is” “Where Is” condition or take your time and complete these repairs and increase your rents on turnover and benefit from the increased NOI. I find most of the time owners of this type of asset class are very familiar and experienced in the market place and the value of their asset. However even if you are or if you are not, finding guidance that can demonstrate value is key to not wasting your time and valuable energy. Most people are surprised when they realize how lopsided the market place is with regards to how many buyers there are verses available product for sale regardless of condition or size.
You will always know you have priced your building correctly when there is multiple offers from qualified buyers. The key is to achieve this in the least amount of time with the least amount of headache to you and your tenants. The market place is busy to the point that if you have one or two offers you may have a good idea how much your building is worth; however if you receive 4 or 6 offers you can be pretty assured of the value.
I once heard a top owner of 1000’s of doors say that the strategy implemented by him and his team is to buy and hold for the next generation. This is a great strategy but it isn’t for everyone so if you are thinking of selling you need to interview as many professional people as possible and them commit to your strategy.