Who and why are people selling rentals right now?

Question

What are the scenarios that someone would sell a multi-family rental unit right now in the current market?

John Williams · Answer

Just spit balling here...

-Move money to stocks - relatively cheap now

-Financing balloon (they either need a new loan or have to sell - and a new loan may not be practical)

-Upgrade - perhaps they've gained some equity recently and they want to redeploy that capital to a larger building and take advantage of the economies of scale

Jeff Copeland · Answer

Year over year prices (Sep 2021 to Sep 2022) are up 11.7% here in Florida, and prices are at an all time high. Why wouldn't someone want to sell?

We remain in a seller's market with only 1.8 months' of inventory. Most of the challenges right now are on the buyer's side of the equation: Inventory shortages, higher cost of capital, market uncertainty.

There's no particular risk to a seller. If anything, there's an incentive to "get it while the gettin's good" and sell while you still can.

And the multitude of reasons someone might have for selling haven't really changed at all, such as:

1. To make a profit and/or capture some of that sweet equity from appreciation

2. To redeploy that equity using a 1031 exchange

3. To upsize or downsize

4. To retire and ride off into the sunset

Caleb Brown · Answer

KC prices are still holding pretty well so they are looking to 1031 or take the cash. Also could be stacking cash for Q1 of 2023. The Winter time is slow with how cold it gets here so if you want to sell you want to do it prior to Dec. After Dec we see it slow down till March

Ricardo Hidalgo · Answer

We have sold all of our rental properties and will allocating 50% of the holdings into stocks and other will allocated toward real estate since we are seeing bigger price adjustments. Crypto may be appealing for some since bitcoin and etherium are at all time lows. I do think the next 6-9 months will be a long term hold scenario as well gradually fall until the mid 2023 or sooner depending on the market.

Paul Moore · Answer

Hi @Koddie Schumaker! There are still some investors willing to overpay for multifamily. Apartment owners who are facing refinance and have experienced significant appreciation, AND have a ready buyer willing to pay a premium are getting out and holding cash for a potential downturn. Or reinvesting into proven value add, recession resistant syndications and funds. Great question!

James Wise · Answer

liquidity.

Carlos Ptriawan · Answer

The grandpa that owned it for 30 years is already tired and wanna cash out.

Eliott Elias · Answer

People will sell for any reason you could ever think of. Some is indicative of the market and some out of necessity, some want to go on a cruise and vacation for 6 months

Who and why are people selling rentals right now?

Who and why are people selling rentals right now?

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