Smart investors make decisions on buying and selling apartments by formula and carefully executed due diligence, not by emotion. A good purchase with effective property management and good market demographics makes it more difficult for wise multifamily real estate investors to make a bad decision over the long term.
Much harder and perhaps more important, is to know when to sell a multifamily investment. While every prudent apartment investor or apartment owner should always have a good exit strategy, many assume everything will go according to the original plan over a period of years. What happens when they don’t or the market changes?
Holding a property longer when it is evident the stars no longer align is often the least disruptive choice. However, the reality is, time is not always your friend.
1. You’ve got equity on your side
A run up in property value is cause for celebration and a prudent time to review multiple strategies. Is it time to harvest equity with re-financing? Do you have sourcing for investor friendly multifamily financing? Better World Holdings is well versed in refinancing, 1031 exchanges, equity financing and strategic apartment financing solutions. Is it time to sell outright, capture equity and seek more value-add in a different promising market? It can be quite freeing to divest an older property, capture years of equity and invest in newer properties requiring less maintenance in growing markets. Do you know when each strategy is best deployed? These are conversations we have with multifamily investors every day.
2. Knowing When To Pull The Trigger
Too often, investors may be slow to realize when their strategy is not developing as planned. Things change. Markets shift. Financing becomes due. New developments may overshadow existing properties.
If you are running out of ideas on how to optimize cash flow and make money, it may be time to sell. If you are bored, tired, frustrated, and grumpy and want to kick the cat every day when you think about your apartment investments, it may be time to sell.
Sometimes, the exit strategy, structure, assumptions, direction or support are not all they could be. If you are not ready to change directions, it may be in your best interest and time to sell.
Selling doesn’t always mean failure, but failing to identify when your strategy is no longer working can certainly hinder the performance of your Texas apartment portfolio.
People invest in real estate to make money. Throughout the life cycle of an apartment property investment, some owners become emotionally attached to a property or properties within their portfolio. It may be the location. It may be the staff. It may be the hard work put into a rehab and the beautiful turnaround. They love the property or properties. Emotional attachment (and this happens really often) can lead to the inability to objectively monitor the pulse of the market. That’s where aligning with a professional multifamily property management company, experienced apartment process improvement and strategic apartment financing solutions need to be at your fingertips.
These professional services help you take the emotion out of key decisions that can make or break the longevity of your investment. Presenting you with hard market data, detailed monthly reporting and proposed process improvements helps you keep your finger on the pulse on your portfolio and your eye on your exit strategy.
4. What worked yesterday may not work tomorrow.
When things are not working out as planned, first look to property management. First, and most important, do you have professional, licensed management in place? Winging it often costs substantial points in reduced ROI. Professional management can quickly add value to your bottom line. From experienced rent collections and effective marketing to maximizing occupancy and optimizing vendor relationships, process improvement strategies increase revenue and long-term value. This is where professional property management can pay for itself lightning fast.
Is your current apartment property management company on top of things? Are they consistently reviewing processes and property improvements with each of your properties? Do they have their finger on the pulse of the overall market as well as the individual submarkets? If not, it may be time for a management change.
Where are your properties in the apartment life cycle?
Where are you in the apartment life cycle with your apartment portfolio and your investment goals? Do you know? Is it time to review your exit strategies or is time to create them? Are loans coming due? Do you have equity built up? Do you need strategic refinancing, workarounds and conversions? At the Better World Family of Companies, we thrive on these questions and finding solutions.
Whether Class A, B, or C conventional apartments, senior living or condominiums, there are specific strategies that work amazingly well depending on where your properties are in the life cycle and where you are with your investment goals.
Is it time to sit down, take stock and develop a plan for your apartment properties? The most common response after going through this enlightening process is: “We wish we would have done this years ago.”
Better World Properties, Better World Holdings and Better World Consulting offer complete apartment life cycle solutions. All under one roof.
As an apartment property owner or investment group, are you ready to take your portfolio to the next level? We visit Texas properties every day to perform experienced apartment due diligence and provide real life solutions for improving ROI and creating beneficial exit and growth strategies.
If you have not yet joined the ranks of many successful real estate investors who invest in Texas apartments, is it time? Give us a call. Better yet, come visit. We love to talk apartments. We’ll be happy to show you around the Lone Star state and help you uncover real investment opportunities that abound here.