Hello, duplex + multi-unit properties are attractive for their cash flow but since they take much longer to sell, the exit (strategy) seems very difficult. What should one expect/plan as far as exit strategy? (e.g., hold for 5+ years & 1 yr listing to sell, etc..??)
Exit Strategy for multi-family
- Thread starter donksky
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QUOTE (donksky @ Mar 4 2008, 12:02 PM) Hello, duplex + multi-unit properties are attractive for their cash flow but since they take much longer to sell, the exit (strategy) seems very difficult. What should one expect/plan as far as exit strategy? (e.g., hold for 5+ years & 1 yr listing to sell, etc..??)
Hi Donna,
how long it would take to sell would probably depend on the area, the condition of property itself and the market at the time you are selling. Currently in my area, properties with 2 or 3 suites are selling as fast as single family and sometimes for more money. In some areas of Toronto, it is no longer financially viable for most families to carry the cost of the house on their own and therefore require additional rental income to help pay the bills. It really depends on your target area. In downtown Toronto right now, many mulitunit properties are going to bidding wars. Certain areas (and properties) may be hot and others will sit on the market for a long time, that can be true of single family as well as multiunit. I saw a fixer upper with 3 apts go for $165,000 over asking last week.
Where are you buying? Maybe someone else will have insight into the multiunit market in other areas. 1 year sounds like a very long time to try and sell a property, especially if you have tenants that will be inconvenienced every time there is a showing. I think if you buy in a good area and price it correctly you should not expect it to take that long to sell.
Terri
Hi Donna,
how long it would take to sell would probably depend on the area, the condition of property itself and the market at the time you are selling. Currently in my area, properties with 2 or 3 suites are selling as fast as single family and sometimes for more money. In some areas of Toronto, it is no longer financially viable for most families to carry the cost of the house on their own and therefore require additional rental income to help pay the bills. It really depends on your target area. In downtown Toronto right now, many mulitunit properties are going to bidding wars. Certain areas (and properties) may be hot and others will sit on the market for a long time, that can be true of single family as well as multiunit. I saw a fixer upper with 3 apts go for $165,000 over asking last week.
Where are you buying? Maybe someone else will have insight into the multiunit market in other areas. 1 year sounds like a very long time to try and sell a property, especially if you have tenants that will be inconvenienced every time there is a showing. I think if you buy in a good area and price it correctly you should not expect it to take that long to sell.
Terri
R
RussellWestcott
Guest
Guest
Terri makes a couple great points above.
Donna it sounds like you are making a couple of big assumptions.
How about if your buy your Duplex/ Multi-plex, and you implement all the strategies you learn as a REIN™ member (Pro-active management, Renovations etc. etc.). You maximize your rents (sometimes more tricky in Ontario) with equity building tenants, you keep your units renovated you are investing in a region with strong economic fundamentals, and have a steady stream of good tenants lined up at your door.
If this property becomes a very strong cash flow performer, with strong rental income. Would this property be very attractive to another investor down the road? Typically the price of multi-plexes are based upon the income the property generates. Plus you may even learn how (if feasible) based upon Howard Wiens presentation last month. You may be able to subdivide the property and sell it off in pieces to individual home owners (Buy By the Yard... Sell by the Foot)
Some food for thought... many REIN™ members have carved out a very good niche in these types of properties.
Donna it sounds like you are making a couple of big assumptions.
How about if your buy your Duplex/ Multi-plex, and you implement all the strategies you learn as a REIN™ member (Pro-active management, Renovations etc. etc.). You maximize your rents (sometimes more tricky in Ontario) with equity building tenants, you keep your units renovated you are investing in a region with strong economic fundamentals, and have a steady stream of good tenants lined up at your door.
If this property becomes a very strong cash flow performer, with strong rental income. Would this property be very attractive to another investor down the road? Typically the price of multi-plexes are based upon the income the property generates. Plus you may even learn how (if feasible) based upon Howard Wiens presentation last month. You may be able to subdivide the property and sell it off in pieces to individual home owners (Buy By the Yard... Sell by the Foot)
Some food for thought... many REIN™ members have carved out a very good niche in these types of properties.
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usually longer .. as multi-family buyers rae more number oriented .. and less emotional .. and a lot more documents have to be exchanged (appraisals, mortgage documents, operating statements, tax info, building condition reports, leases ..)
I`d say: if you`re priced right it takes a FEW WEEKS to get a decent offer with 2-3 months to closing .. and then it may fall apart .. so yes ONE YEAR is a good time frame IF you wish a good price .. shorter if your price is low or too low or there is very high demand ..
remember: you need only ONE good offer .. not 15 ..
I`d say: if you`re priced right it takes a FEW WEEKS to get a decent offer with 2-3 months to closing .. and then it may fall apart .. so yes ONE YEAR is a good time frame IF you wish a good price .. shorter if your price is low or too low or there is very high demand ..
remember: you need only ONE good offer .. not 15 ..