What is the bare minimum that your agent or broker should be doing to sell your investment real estate? I was showing small investment properties all day today in Reading, PA. I was with an investor that I have worked with quite a bit, and we started discussing the range of information that we were provided by the different agents. For some of the properties we were given income and expenses and end dates for existing leases, at others we were given just the rental rates, and at some we weren't given any figures at all. Keep in mind that when buying investment properties, most investors are primarily concerned with the numbers. Not providing all of the numbers is like trying to sell a house, but only showing half of the rooms. How is my investor supposed to make an educated purchasing decision without all of the applicable numbers. So what is the minimum that your agent should provide to potential buyers?
- Rental Rates: How much is each unit rented for
- Utilities: What utilities do the tenants pay directly, and what expenses does the landlord pay?
- For utilities paid by the landlord, what was the total paid last year?
- Taxes: This one is easy. It's typically available in the public records
- Lease Expirations: When does each lease end? This helps the investor determine if any leasing commissions or advertising expenses will need to be paid soon.
- Repairs: Repair expenses for the past year. This provides the investor with an idea of how well the property is taken care of. It also provides some insight into the behavior of tenants.
These are what I consider the bare minimum that should be provided to each potential buyer. I also like to provide potential buyers with copies of leases and any service contracts that the seller might have in place at the property. I do this because many investors won't even look at a property if they can't figure out if the numbers work. To do this they at least have to be able to calculate the NOI. Often if a potential buyer doesn't have all of the information, they'll move on to the next property, or if you're lucky, they'll send in a low-ball offer.
What is your agent providing to potential buyers?