When to notify Property management of impending sale

Question

We are looking at putting a property on the market in the next month or two most likely. At one point in our discussions that might have been something we did a year from now and now I think we know we will do that much sooner. We have liked our current property management company and I was wondering when would be an appropriate time to notify them of our intent? I'm thinking now or at least as soon as we have a hard date in mind to list it.

David Brent · Answer

I would think you tell them as soon as you have a 'relatively' hard date. Here's why: 1) you are close partners (I assume), and it's a nice courtesy. 2) You will need them for the process - showing unit, running reports for buyers, banks, RE company, etc. 3) you may also find them a good resource for helping to find buyers, and 4) you may need them for prepping the unit for sale (paint, flowers, extra landscaping, etc.)

What would be the concern in telling them? (that they may take their eye off the property and stop maintaining and collecting)? If anything, they should know that they need to be very much on top of collections, as late and uncollected rents will impact the loan any new buyer may qualify for.

Danny Randazzo · Answer

@Chris Wilson nice. Existing management will be incentivized to continue doing a good job while you take over the property ownership.

Chris Wilson · Answer

@Tracy Streich Thanks Tracy, it will likely sell to another investor. We just recently completed a major structural update and a number of capital improvements to the property so it is in overall good shape with still some value add possibilities. Most of the units are with long term renters and are month to month now, just one with a recent lease.

@Danny Randazzo Thanks Danny, it just a small 7 unit building with no onsite staff. I do want to work with the current management to provide references if needed and make the transition as smooth as possible.

Danny Randazzo · Answer

@Chris Wilson what size property is it? Typically for a 100+ unit multifamily property you’d inform management several months before listing and setup a sale bonus for the onsite staff

Tracy Streich · Answer

@Chris Wilson right now is the answer. There are a lot of moving parts with a rented property. You need to know when the lease is expiring first of all. Are you selling to another investor or end user? Get with the PM now and get a plan so you don't get stuck with a sticky situation.

Drew Sygit · Answer

The sooner the better! Whether it sells or not it a different story.

Reasons:

1) They may be able to help you figure out if better to sell with tenants in place or vacant

2) If you want it vacant to sell, you can avoid them renewing a lease

3) If you want it vacant to sell, they may be able to help negotiate an early termination with the tenant

4) They may have another client that may want to buy it, allowing you to negotiate a deal better than the typcial 6% agent commission.

Chris Wilson · Answer

@David Brent, thanks for the reply. The only real concern I would have is if things take a turn timing wise and we wind up not listing till much later in the year. I don't want to set false expectations with them yet want to give them plenty of notice.

When to notify Property management of impending sale

When to notify Property management of impending sale

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