When selling a multifamily or commercial property with existing tenants, you have a few options. It’s important to communicate openly with your tenants about the sale, as their leases and living arrangements could be affected. Typically, existing leases will transfer to the new owner, meaning tenants can stay until their lease term ends under the same conditions.

We often take over handling existing tenants from you during the sale. If we intend to make changes, such as renovations or converting the property to a different use, this may impact the tenants. In such cases, we use our expertise in local tenant laws and regulations to ensure that everything is handled legally and fairly. Sometimes we negotiate with tenants to move out early, and we might also offer them financial incentives. Ultimately, handling the situation with transparency and respect can help maintain a positive relationship with tenants throughout the sale process.

When selling a multifamily property, commercial property, or land, it's essential to have specific documents and information ready to share with potential buyers. You might not have all of these documents but whichever of them you do will be extremely helpful to potential buyers. Here's a breakdown for each type:

Multifamily Property:

1. Rent Rolls: Detailed records of current tenants, their lease terms, and rent amounts.

2. Lease Agreements: Copies of all existing leases, including any agreements related to parking, storage, or other amenities.

3. Financial Statements: Profit and loss statements, utility bills, and maintenance costs over the past 12-24 months.

4. Maintenance Records: Documentation of any repairs or upgrades made to the property.

5. Occupancy and Vacancy Rates: A history of tenant turnover, occupancy rates, and any units currently vacant.

6. Property Management Agreements (if applicable): Contracts with any property management companies that handle the day-to-day operations.

Commercial Property:

1. Lease Agreements: Similar to multifamily properties, but often more complex, especially if dealing with multiple commercial tenants.

2. Zoning Compliance: Documentation that the property adheres to local zoning laws, including any special permits or variances.

3. Environmental Reports: Any environmental assessments or impact reports, particularly for properties with industrial or hazardous materials history.

4. Building Plans and Permits: Architectural plans, construction permits, and records of any significant alterations or expansions.

5. Operating Statements: Detailed financial records showing income, expenses, and net operating income (NOI) for the property.

6. Tenant Profiles: Information about the tenants' businesses, lease terms, and rent payment history.

Land:

1. Title Deed: Clear proof of ownership and any encumbrances or liens on the property.

2. Survey Reports: Up-to-date surveys showing property boundaries, easements, and any encroachments.

3. Zoning and Land Use Regulations: Information on how the land is zoned and what types of development are allowed.

4. Environmental Assessments: Reports on the land’s environmental status, including any contamination or protected areas.

5. Utility Access and Infrastructure: Details on the availability of utilities like water, electricity, sewage, and road access.

6. Topographical Maps and Soil Reports: These can provide insights into the land’s suitability for various types of development.

Multifamily Property Valuation: To accurately value a multifamily property, the income approach is the most commonly used method. This involves calculating the Net Operating Income (NOI) and applying a capitalization rate (cap rate) to determine the property's value based on its income-generating potential. Factors such as current rental income, occupancy rates, and operating expenses are critical in this assessment. Additionally, the comparable sales approach can be used by comparing your property to similar multifamily properties that have recently sold in the area. Real estate professionals can provide the necessary data and analysis to help you understand the market value based on these comparisons.

Commercial Property Valuation: Valuing a commercial property typically involves the income capitalization approach, which calculates the property’s value based on its ability to generate income. This method considers the NOI and applies an appropriate cap rate, which can vary depending on the type and location of the commercial property. Another important method is the comparable sales approach, where the property is compared to similar commercial properties that have recently sold, taking into account factors like square footage, location, and property use (e.g., office, retail, industrial). In some cases, the cost approach is also used, which estimates the value based on the cost to replace the building with a similar one, accounting for depreciation and land value.

Land Valuation: When valuing land, the most common method is the comparable sales approach, which involves analyzing recent sales of similar parcels in the area. Key factors include location, size, zoning, and the land’s development potential. For land with significant development possibilities, the valuation might also consider the highest and best use, which assesses what type of development would maximize the property’s value. In cases where the land has improvements, such as utility connections or infrastructure, the cost approach might be used to add the value of these improvements to the base land value. Working with a professional appraiser or land use expert is crucial for an accurate assessment tailored to the specific characteristics of the land.