Real Estate News and Market Moves Week 79

Welcome to the first installment of our blog series on selling your Single-Family Rental (SFR) portfolio. I’m Alex Becker, Auben’s Director of Business Development. As a seasoned property management professional and real estate investor, I’m excited to kick off this series aimed at empowering fellow investors. In this series, we’ll share insights gained from our own experiences, providing valuable guidance to help property owners navigate the complexities of the selling process with confidence.

Timing is Everything 

Real estate is a market that thrives on timing. Being knowledgeable about current market trends and property values can significantly impact your bottom line. Regularly reviewing your investments with industry experts is crucial as it provides a broader perspective on when to make your move. After years of helping property owners buy, sell and manage their rental homes, a clear “sweet spot” to sell has emerged – when repairs are low, rent is high, depreciable basis is not completely gone and there are other (better) opportunities.  

Identifying Your Goals and Needs 

Before diving into the sale process, consider your specific goals. Are you seeking liquidity for reinvestment or cash needs? Is the management burden of your properties becoming overwhelming? Perhaps diversification is on your mind, or you need to evaluate the condition of your properties. Clarity in these aspects will guide your decisions. Plus, because real estate is a tangible asset, it often carries emotional significance compared to other investments like stocks or bonds. Engaging with local professionals can provide you with an unbiased view of your portfolio of assets and customize your strategy to effectively achieve your personal goals. 

Selling Your Portfolio Intact 

While the idea of selling your portfolio intact might seem counterintuitive at first, it could very well be the most efficient and profitable approach. When you consider the sale of properties individually, think about the complexities involved: negotiations, inspections, and repairs to name a few, and ongoing holding costs like taxes and insurance, as well as commissions. Selling your portfolio as a whole not only simplifies the transaction but can also maximize your returns in the long run. 

Here are my takeaways as to why selling your portfolio of assets intact can be beneficial: 

1. Ease of Transaction: This is the biggest benefit in my experience. Managing one transaction instead of multiple reduces the overall time, stress, and logistical challenges of selling properties one by one.  

2. Time Value of Money: Time is money. By selling your portfolio outright, you avoid the complex and lengthy process of selling individual units. Self-managing owners of rental properties in particular often don’t put a value on their time. Consider how much your time is worth and how much revenue could be lost during multiple sales processes. 

3. Hidden Costs Impact Profitability: Selling each property one by one can lead to unforeseen costs that may diminish your overall profits. Keeping these hidden costs in check is vital.  

4. Mixed Asset Portfolio Challenges: If your portfolio consists of a mix of townhomes, duplexes, condos, and SFRs, finding buyers for each type can be challenging. A diverse portfolio of real estate typically has a smaller buyer pool, which could reduce your selling price and take longer to liquidate. Remember, time is money.  

Developing a comprehensive strategy informed by current market conditions and your personal goals is essential when selling your SFR portfolio. In the next post, we will explore different approaches to evaluating your portfolio. Stay tuned!