Many people understand a lot of the common sense steps to take prior to listing their home for sale – keeping the yard neatly landscaped, removing clutter, touching up paint, and so on. The vast majority of these same concepts that enhance the curb appeal also apply when selling an income-producing property, such as retail, office, or multi-family property.
However, savvy potential investors will want to have access to much more detailed information than what a residential seller is accustomed to providing. So there are some simple steps that should be taken by a seller before putting the property on the market in order to maximize the value of the asset.
Keep organized files of the income-producing property
You will want to have all of your records pertaining to the property neatly organized, preferably in both hard copies and stored on your computer, CD, jump drive, or dropbox that can be easily transferred to potential buyers. These records include copies of deeds, title policies, surveys, building plans, current leases, use restrictions, lists of vendors, etc.
Maintain accurate financial records
It may seem like a pain to do at the time, but maintaining accurate financial statements for your income-producing property will be essential. Prior to purchasing an investment property, most investors will want to see profit and loss statements (P&L’s) for at least three years prior. Not having these records (or even worse, having inaccurate financial records) will greatly reduce the pool of potential investors who would consider buying for your property.
Be upfront about potential impediments in the deal
One of the most critically important steps to ensuring a smooth sale process for your property seems counterintuitive to most people – disclose potential problems with the property up front to buyers. For instance, if you know the HVAC system is running on its last legs and will need to be replaced soon let potential buyers know that up front. If you don’t they will most likely end up discovering this during their due diligence. If and when the problem is discovered during due diligence, it can cause major issues and the deal to fall apart. Most sophisticated investors will then wonder what other issues you are trying to hide from them and walk away from the deal, leaving you at square one to find another potential buyer.
[bctt tweet=”Most steps that need to be taken prior to selling your investment property should begin well in advance of selling the property”]
As you can see, most of these steps that need to be taken prior to selling your investment property should begin well in advance of selling the property. Ideally, you want to prepare for the potential sale of your property the day you purchase it. Keeping the property professionally managed (either by yourself or through a third party management company) will help you to effectively maximize the value of your asset upon the sale.
To read more of my articles click the following posts:
- 4 Forces in the Economy that have Impacted Commercial Real Estate Properties
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About Chris Palmer - Chris has been working with commercial real estate in Pensacola, Florida since 2010. He primary specializes in working with commercial real estate clients on development and investment related properties. Click here to read his full bio, or if you would like to contact him, you can call him at 850-434-7500 or email him at CPalmer@SVN.com.