Thank you so much for checking out the Real Estate Today podcast. Right now we’re going to discuss getting a rental property ready to sell.
Bob Nelson: I’m Bob Nelson, Real Estate Investment Broker with Pacwest Real Estate Investments.
Marcia Edwards: And I’m Marcia Edwards, Residential Broker with Windermere Real Estate.
Bob, I’ve always admired the way that you represent sellers. The way you help buyers understand the opportunity in the investment property you have. What is the process to get a property ready for sale and to optimize the seller’s return?
Bob Nelson: Let’s focus on rental properties, apartments, residential rentals, industrial, commercial. First of all, before you bring the property on the market, prepare the due diligence package that you know a reasonable buyer is always going to require.
Marcia Edwards: A due diligence package, you’re talking about helping them understand the physical characteristics of the property?
Bob Nelson: Not just the physical characteristics, I’m going to allow them to understand it, but they’re gonna bring in their own inspectors to identify exactly what’s there. I want them to rely upon their inspection after I made a good disclosure as to what the asset would be.
Marcia Edwards: That’s interesting to me. If you’ve got, say a 20 unit apartment complex, are you going to give the buyer access to all 20 units? Won’t that be fairly disruptive?
Bob Nelson: Only once they’ve made an offer that appears to be acceptable to my client. If I could arrange with one friendly tenant, to show their property, on a fairly slight notice, on occasion the person wants to see it this afternoon and that’s not 24 hours, so I typically will arrange with on friendly tenant. Particularly one that has decent housekeeping features. I’ll give them $20 if they allow me to come in with the person fairly quickly.
Marcia Edwards: So that’s part of it, is to set up that showing for kind of the showroom site.
Bob Nelson: Exactly.
Marcia Edwards: What about the property itself? Are there other things that a landlord should do to prepare to be a seller?
Bob Nelson: The big thing is put your numbers together. The buyer is going to ask for the last several years of productivity, income and expenses, actual income and expenses, and at that particular point, they also need the rent rolls, so complete the rent roll, each unit, what’s it rented for, what’s it deposit, who’s it paid in advance, et cetera. If you have any slow payers, that has to come out at some point, whether you bring it out right now or not, it’s up to you.
Marcia Edwards: Are they gonna look at the taxes, because my number on my taxes may not reflect the actual benefits of the property … uh oh, we’re stuck with that.
Bob Nelson: Yep, they will, and that’s a common deficiency. What you report on your taxes may not be exactly what has happened.
Marcia Edwards: I’m Marcia Edwards, Windermere Real Estate.
Bob Nelson: And I’m Bob Nelson, Real Estate Investment Broker with Pacwest Real Estate Investments.
For more expert insight and analyses of the investment real estate market, listen to more podcasts by clicking on the button below.