Leaning (hard) toward selling. I have questions. 1) How important is having higher rents a factor in capturing top pricing in sale of property? I've been great with pricing remodeled units at top of market but have tended toward nominal raises for my long-termers. Felt fair also as their units had not been updated. So (12) updated 2B/1Ba units 825-895 and non (4) are 700-720. Considering raising rent at beginning of year but w/Covid and economic circumstances, a little hesitant. 2) Is it optimally important to do as many repairs and complete projects or defer? ie: I switched one 4 plex to central air from swampers on roof. Took swampers down but patched roof with sheet metal 2 yrs ago. Figured I' wait until hail storm or.something to replace roof. Other 4 plex, I switched to mini-splits this year but left old swampers covered on roof figuring same. Also, mini's replacing baseboard heat.. Huh, do I remove and patch old baseboard heating? Will potential new owner likely want me to do these to completion? I'm feeling whiny. Come on! I just put in new AC and mini's! --172.58.xx.xx

MY BELIEF ONLY...... all real estate is location location location - interview 3 realtors with these questions - I could not offer you an answer worth a hoot sitting in NH --24.62.xxx.xxx

Top condition for top dollar. --184.53.x.xx

I have been told that to sell to an investor at a better price, the rents have to be higher to make a good return on investment. So having an empty unit and jacking it up before the sale might be a good idea. I can't nickel and dime tenants either to get rents up because it's better to keep people for a long time than lose two months rent every two years. I have made thousands by keeping tenants for many years. --71.104.xx.xxx

I also chose the buyer I felt would be the best landlord for the community and for my existing tenants. Chose the buyer who would be occupying the other unit and not the out of state investors or local slumlord whose first request was to see the existing lease so they could plan for an increase. --216.186.xxx.xx

Had you raised rents earlier, your property would be worth more, raise rent now, and hopefully the recent increase won’t raise the investors eyebrows. --67.43.xxx.xxx

We have found when selling a rental property (SF or Duplex), if the current tenants are poor housekeepers, it is best if the unit(s) are empty. We tried to sell a SF a few years ago -- the tenants would not cooperate on keeping the place presentable, even with incentives. You can clean it up and get it ready to show. That is just our experience; it might be different in your market. --209.132.xxx.xxx

--47.155.xx.xxx

Oh this is all good feedback. The one that got me a bit squeamish is Cisco, what you shared: "the balance sheet, P&L & cash flow statements And tax returns so that no explanations are needed" Tax returns? Even the president doesn't share tax returns. I have no interest in sharing that. Is this required? I thought it might be more based on what Robert said, just based on rental income. That's what you meant, Robert, Yes? That's what I looked at when purchasing. Although I was totally inexperienced buyer. --67.190.xx.xxx

--67.43.xxx.xxx

Drew: you show just the schedule e for the property if asked for copy of return. that will prove the rents received. I don’t understand Lisa’s logic for extending leases at current rents. I would always increase rents on renewals..to collect more $ now and to show prospective buyers the higher rents = higher price...as Rbt states....you are selling an income stream... --107.77.xxx.xx

Sure. I get it. So is it just the most recent year tax return? --67.190.xx.xxx

So I just did a ton of remodeling for the past couple years at the expense of taking a larger profit, planning on keeping rentals forever. And so I'm concerned about the lower profits that will show. I guess I could wait a couple years to re-establish a better cash flow. --67.190.xx.xxx

Get your accounting in order, it will make all the difference when selling. --67.43.xxx.xxx

Thank you, Sisco. Point taken. Accounting has not been my strong suit. Kept planning on establishing accountant relationship etc, once I was ready and could pull it together. Some illumination and clean up is in order. And I imagine there will be some hand [or face?] slapping. :/ --67.190.xx.xxx

Oh and I still have the question. From your experience, how many tax years back might a seller need? --67.190.xx.xxx

--67.43.xxx.xxx

Moral of the story.... hire an accountant to clean up your books going back a few years. The cleaner and better your documentation the easier it will be for buyers to calculate their ROI and make an offer. --137.119.xxx.xx

as mentioned. remodel is capex and depreciation is below the operating profit line. operating expenses & capex all reflected on schedule e. when I buy though I have already determined expenses to pencil out. --107.77.xxx.xx

I would suggest interviewing two or three RE agents who specialize in multi-family/apartments and asking what they recommend. Some areas may be very soft regarding proof through taxes, etc. while others it will be expected. That's where a decent agent will be able to help you decide what might work best for you in your particular circumstances and why. --73.25.xx.xxx

Drew,since immigrating here in ‘56I have never sold anything yet,don’t have a reason to?....................charlie................... --32.214.xxx.xx

The children are all pretty hep when it comes to RealEstate,they’ll know what to do ,when push comes to shove...........................charlie..................they just watched!its amazing what you learn from watching,,just watching and knowing when to keep quiet.................!!!!!!???? ??????? --32.214.xxx.xx

Ok. Step one, I am going to get my financials together this year and hereafter. Exploring software programs. Right now, doing 2 weeks free with Buildium and have a demo scheduled for this morning. JB, I think you're right, there are a range of prospective buyers, and not all will be focused on the reports and such and yet, I sure don't want to lose out on those savvy investors who would be as Sisco shared. Also putting my feelers out for a good accountant. Thanks! --67.190.xx.xxx

And one more thing. Noticing it's good to have a speed bump in process of selling the rentals. As Cjo'h shared about never selling RE, I realize what a blessing they have been and how much I have put in. Sometimes I wake up on the wrong side of the universe with them and go straight to just wanting to sell them. Still might happen but a little delay and re-focus/reframe might be good right now. --172.58.xx.xxx

Sounds like it would be good for you to get your books and your properties ready to sell, then KEEP them. Your business will be all the better. --70.92.xxx.xxx

I'd remove any abandon equipment as it just leaves questions. Once they like the numbers they will use their eyes to like the property. If its "clean" it will be easier to understand. --99.203.xx.xxx

Drew, since you have a check register and rent role, I'll bet that you can get your 2018, 2019 Balance Sheet, P&L & Cash Flow statements. --67.43.xxx.xxx

Busy, LOL, "Let’s get the house ready to sell. Then DON’T move.” Yeah, maybe like that for me too! And yes,, maybe bootcamp (IF I'm staying in lol). I'm not so early in. Starting 14th year with 16 rentals. I've been a rock star with many aspects - Remodeling, drawing high end of market rents, and solid screening, leases, and tenant communication. Got into bad habits around maintenance documentation, accounting, and financial records(see: sloppy) and now it's just time. Yes, Sisco and Hammer. I read that example. Makes sense. And you're probably right Sisco, I should be able to pull it together with some framework and accounting guidance. Have just gotten overwhelmed and humbled as I'm in the beginning w/no frame of reference around these types of systems. Like a new language. I did have my call with Buildium today and Holy Sticker Shock! (I'm looking for a software to help me stay better on track proactively). I thought it was $47/month(and thought it was expensive lol) but I guess the ones with the features I want starts at $156/month! Demo in a few days. Appreciate the wisdom & support, Team Mr. LL! --172.58.xx.xxx

old chinese proverb, buy, no sell. i'd give it a run with a property manager to see if the reduced time requirement makes it better for you. if the improvements you made are in excess of what the typical tenant requires then learn from that and stop making them like YOU'D want them and make them basic and typical for that 'hood. with that many units the new owner may have plans for the units so DO NOT extend leases. let the new guy make his own business plan. pro-forma (prospective) rents are often used by buyers as they analyze their deals. do not hamstring them with long term leases --66.27.xxx.xxx

Good resources are plentiful these days. Whatever software you choose, You need to get your chart of accounts set up. John Hyre sells one for QB. If not, I suggest that you start with chart of accounts before you buy anything. --67.43.xxx.xxx

Thanks, Sisco, I am in agreement and this is my focus these day — getting accounts in order. Still looking for the system/software to put in place for me to record keep, regardless if I keep or sell. Are you referring to Hyre's KISS course/guide to Bookkeeping and then paired with Quickbooks? (does $297 and a Big white binder sound right?) --67.190.xx.xxx

Drew,I’d say latch unto the big white binder at the dollar store,the other stuff ,wait a while,that can come later,much later................................charlie --32.214.xxx.xx

Busy,you got that Corona thing down there too,Well,I’ll be!!!!.......... charlie.........................what next will they think of? --32.214.xxx.xx

Mike, that is a great Chinese proverb! Lol! --70.92.xxx.xxx

Drew are you in downtown Den? I’ve owned 4plx since ‘04, paid 80k per unit and have only painted, repaired And fixed prior deferred maint for years now(1960 all brick building never vacant) I regularly receive offers at 250k per unit. Similar props I’ve seen CA money come in and remodel with granite and high end finishes and split them into “condos” ~800sf each selling @350k! In downtown it’s about location, parks light rail walk/ biking and parking. --71.211.xxx.xxx