INVESTOR'S CORNER

ABOUT US  |  PROPERTY MANAGEMENT SERVICES  |  CONSULTING SERVICES  |  BROKERAGE SERVICES  |  SYNDICATION
 

BROKERAGE

Are you considering buying or selling a large apartment asset? Don’t do it without a CERTIFIED PROPERTY MANAGER (CPM) on your disposition or acquisition team! Why choose a CPM?

FOR SELLERS

As a seller, the value of your asset will be maximized when your on-site operations are in peak condition and financial records are orderly and comprehensible. As your agent, the Management Innovations brokerage team will perform a thorough inspection of the physical plant and all books and records prior to listing your property for sale. The goal of this pre-listing inspection will be to identify any deficiencies and remedy them before they become barriers to a quick and price-maximized sale.

Prior to the property being place in the market, we will ensure that your on-site books and records are in order, that the curb appeal of the property is maximized and that all problematic physical defects are identified. Once identified, a corrective plan will be drafted that includes costs estimates for repair. Then the decision will be made whether it is wiser to implement the corrective plan prior to listing the property or make it a negotiable item at the time of sale. Either way, physical defects, especially serious ones, will be less of an obstacle for potential buyers when they are honestly disclosed and a corrective action plan ready for review by the buyer.

Similarly, the financial accounting records must be in order. We will inspect all financial accounting records for accuracy and assemble financial reports to be included in the offering package that are easily comprehensible and verifiable.

Our brokerage team will do everything possible to make purchasing your property an easy transaction for the buyer. The acquisition process itself is complicated enough. We don’t need to add to the complexity by presenting confusing financial reports or attempting to hide physical defects. Things are what they are. We believe in full disclosure: the good and the bad. The fastest way to kill a sale is for a potential buyer to “discover” a defect that was known to the seller. Very few problems cannot be overcome in the negotiation process. However, if the integrity of the seller or its agent is in question, a successful and equitable sale will surely be compromised.


FOR BUYERS

The long-term success of any large apartment investment is largely dependent on having a thorough understanding of the physical plant and property’s operations prior to the actual purchase. Nothing is more important than this. You must know what you are buying and you must be able to verify what you are being told by the seller. Let’s face it. There are many sellers and agents out there that do not operate by our belief in full-disclosure. Therefore, it is caveat emptor- BUYER BEWARE! We are masters in obtaining the facts and discovering any secrets about a potential investment.

Our acquisition team will thoroughly inspect all areas and systems of the physical plant. Areas include, but of course are not limited to, all apartment interiors, the leasing office, recreation rooms, maintenance shops, storage areas, laundry rooms, the pool/spa and equipment, air conditioning and master water heating systems, elevators, building exteriors, roofs, staircases, patios and balconies, landscaping and irrigation, garages, carports and open parking areas. Defects will be identified and repair estimates obtained. These items will then be negotiated with the seller.

All on-site books, records and operations will be thoroughly inspected for accuracy. The on-site staff will be interviewed for two primary reasons. Initially, the on-site staff can be instrumental in identifying any physical defects and in obtaining information about overall operations. Secondly, it is helpful to get an initial impression of the on-site staff to determine if staffing should remain the same after the purchase or if changes should be made. If so, the search for a new manager should begin during the escrow period.

A thorough rental market survey will be conducted to establish the market in which the property competes. This survey will provide information necessary to understand the subject property’s “place in the market” and to determine what are the achievable and realistic market rent levels for the property. This is important, especially if the seller has priced the property based on “projected” net operating income.

A visit will also be made to the local planning department. Information will be obtained regarding the status of any new apartment inventory that is in the development pipeline, how much vacant land remains that is zoned for apartments and about any anticipated changes to zoning that may allow for development of more apartments. This information is critical because it can affect future absorption and vacancy rates at the property.

Lending rates and programs will be investigated and analyzed to determine the best debt structure for the investment based on the buyers goals and objectives.

Finally, the financial accounting records will be inspected and all information provided by the seller will be verified. The rent roll will be analyzed for accuracy. The general ledger will be audited for accuracy and for the purpose of identifying any chronic physical defects that require frequent repair.

All information obtained will be analyzed to determine if this asset can meet your investment goals and objectives.

There are many brokerage firms and agents in the market today. Very few have the depth and breadth of our working knowledge of on-site operations and financial accounting. Even fewer are CPMs. Give yourself an instant advantage by selecting a firm that knows what it takes to make a large apartment real estate transaction successful. Choose Management Innovations, Inc.
 


Copyright © 2012 Management Innovations, Inc.

Home | Consumers | Investors | Contact Us