I've been researching some new markets to buy rentals (multifamily) in, and saw one 10 unit property that seemed to have some good numbers, very interesting. It was purchased in 2007 by a local realtor, then listed for sale (for more than purchase price) in 2008. Since then, it has repeatedly had the price lowered, pulled from MLS, relisted a few months later with a lower price. Several times. Its most recent list price was significantly lower than the original purchase price. Seems like the owner just wants out. It was pulled off the MLS again just a few weeks ago. Another similar property not too far away sold about a year ago for about 93% of the most recent list price. So, a couple questions:
1) What red flags does this raise in your mind? I've considered that perhaps there is some deferred maintenance (though the building is only 15 yrs old) that other buyers didn't want, perhaps they're using a crummy PM that's resulting in bad tenants/high turnover/high maintenance costs, or maybe there just aren't a lot of buyers for commercial properties in that area (suburb-ish town of a larger city). What possibilities have I not thought of?
2) If we decide to pursue this property, what method do you recommend? We could contact the owner (a realtor) directly to negotiate, or get another local realtor to represent us. We've never negotiated directly with an owner who was a realtor before, we've always had a buyer's agent, though we have used the listing agent as our buyer's agent a couple times with good results.
I would go look at the property and see first hand what it is that is scaring other buyers away. If another one like it sold at 93% of the last list price, then there are buyers out there (at least 1 that probably considered it)...so I would imagine there are some problems with it.
As you mentioned, it could be bad tenants or deferred maintenance. You could always just ask the agent why they're selling it and see what kind of response you get. At the end of the day, if you have any interest you should go walk through it or at least drive around the outside if you haven't already. I've looked at plenty of properties on google streetview that look great from the MLS photos, but everything around them is terrible. Saves me the trouble of even driving by.
LOL, just realized I didn't make it clear by saying that I'm looking at new markets. This property is thousands of miles away, so driving by is not an option. I have been doing lots of google streetviews in several markets to check out areas, as well as looking up info about particular neighborhoods, so I think this property is in a decent area of town. Love google streetviews, what a time saver! Definitely plan to talk to some local PMs about areas before proceeding further, and also plan to take a trip to a couple markets we're looking at to see first hand.
Curious if anyone has any other thoughts on this topic...
Hi Kimberly T. in regards to viewing properties that are long distance. You could utilize the services of myself or a company that I work for that provides you with a visual and photo report on the property you are interested in. I work with Velocity REO's they can have some one do a quality inspection on the property for you and provide you with the report. I myself live in Florida and work as an independent contractor I have a number of assignment with different companies so I also locate FSBO properties to a group of investors. I look at properties and provide a personal assessment of the property take photos and provide you with a report on the findings of the area and concerns with the property.
In regards to what might be an issue of the property that its not selling depends on were it is located and what the amenities of the area are. But like Michael said the best way to start would be to ask the owner why he is selling and why it has been on and off the MLS so often.