“How You Can Earn More Money At The Closing Table. Find out what successful apartment owners are doing….
Even though investing in an apartment is a long term commitment there are certain strategies and habits that are implemented by successful apartment owners that have literally meant thousands of more dollars in income at the closing table. This brief report will provide to you, in a nutshell, the three key habits that I have found owners implementing on a consistent basis.
1. THEY DEVELOP AN EXIT STRATEGY – BEFORE THEY SELL!!
Every real estate asset must have an exit strategy. Ideally you need to devise a plan BEFORE YOU SELL. Most owners have a foggy idea of what they plan on doing when puting the property on the market but tend to take a “wait and see” attitude toward the process. Most of the time this cost you money. I have seen it over and over again. Thise owners who have a plan when they sell as far as price, terms, possession, dates, tac pro-rations, maximum contingency and closing dates to arrange things like a tax deferred exchange. Many owners who do not have this kind of a plan and stick to it are asking for trouble. When you shoot from the hip you will pay with money out of your pocket and into the buyers. Better yet, put the plan in writing.
2. THEY ARE GREEDY ( I MEAN IT – IT WORKS)
The owners that I hve worked with that have gotton thousands more for their apartments had an attitude of “if it sells fine, if not, no big deal” Now, before you go putting a price on your property twice more than it is worth hear me out. The key to this is pricing the property right in the first place. What this does is if marketed correctly, will get multiple offers competing for your property. With this kind of attitude you can be coy and let the buyers battle it out for your property adn let the price go up in the process. No effort on your part. If you act as if your property is the best deal out there quite often other buyers may, not admittedly, feel this way as well. The key to this kind of strategy is to price the property right and have the property in very saleable condition in the first place. Also, and this is VERY important, smart sellers find out why the buyer is buying. WHY? Some sellers or their representatives make a HUGE mistake by telling that the reason they are buying is to complete a 1031 tax deferred exchange, and, the buyers have 14 days to identify a property. What great leverage. If you have a buyer who HAS TO BUY and is making an offer on your property you can handle the negotiations to get ALOT more. I have used this before with my clients and it works well. Also, if I represent a buyer who has to exchange, I will never tell the seller the reason why.
3. THEY MARKET THE PROPERTY CORRECTLY
This is key. What would rather have. One offer form one buyer OR would you rather have three or four offers from three or four different buyers who want to buy. If you can set the tone and create this kind of auction atmosphere you will assuredly make alot more money, literally thousands more, at the closing table. Bottom line here is get the property in front of the hottest buyers at the same time. HOW? It’s all about timing. Today’s buyer may be tomorrow out of the market owner. You wil need to keep in touch with who these hot buyers are and what their buying cycle is. This combination, even though it sounds elementary enough , is ignored by many a seller. Don’t be one of them.
4. THEY USE SPECIALIZED REALTORS, ATTORNEYS AND TAX PROFESSIONALS
Generally, effective apartment owners use Realtors for advice, assisting in purchasing or selling their projects. Effective owners realize Realtors specializing in apartments bring much more value to their bottom line than a Realtor having an open house on Sunday and trying to assist an apartment buyer in purchasing a 100 unit project on Monday. The same concept can be said for attorneys and tax advisors to the effective owner. The cos may be a little more but it far outweighs the long term wealth benefits as using such professionals.
5. IF THEY SELL- THEY NEVER “CASH OUT”
Effective owners will not cash out their properties- it creates to much of a tax burden and loss of hard earned equity. If these owners do decide to sell they will either use a tax deferred exchange, UPREIT, or an installment sale- never all cash up front. Much advise is gained from other professionals before a property is sold.
6. THEY STAY FULLY INFORMED
By keeping in touch with market changes on a national and local level these owners are always in a position to make informed decisions about the operation of their apartment properties and keep in contact with their sphere of professionals.
7. Work with an experienced broker that has been through and facilitated exchanges.
The best brokers specialize in apartments and have a designation such as CCIM or SIOR. They have also done dozens of exchanges. Do not work with a Realtor that dosen’t know how to assist you in a profitable exchange of a project. Prior to working with them be sure to ask how many units they have exchanged.
8. Not knowing your time dead lines for the Starker Exchange.
Keep in mind that after you sell you have 45 days to identify a property and 180 days to close on it OR the aniversary of your tax year-whichever comes first.
9. Not being prepared with the correct legal assistance.
There are many guidelines you will need to follow and additional documentation that will need to go through the exchange to keep the IRS happy. Making sure you have competent legal assistance is key. A mistake here can possibly void all of the tax savings you would otheriwse receive.