Selling investment property - how much to fix up beforehand?

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Breezy
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Joined: Mon Jul 11, 2011 11:38 am

Selling investment property - how much to fix up beforehand?

Post by Breezy »

We're considering selling a 5-plex that we've owned for a long time. All properties in the city seem to be moving fast, including income property. The property is on the older side, always 100% rented. Roof does not need to be replaced. We're trying to determine if we should paint the exterior of the unit before listing and do small repairs we'd typically definitely do? Let's say it will be $5000-7000 to get the property looking a bit better.

Our realtor has given us a fairly large range of possible selling prices, and we trust that he is giving us good numbers. We also get unsolicited low-ball cash offers pretty regularly. I'm wondering if in this market we should do anything at all? My sense is professional investors will give low offers in any case no matter what we do, and mom-and-pop investors might pay on the higher side regardless. As of today, all 11 multi-unit properties listed in this zip code are contingent, but they do run the gamut in terms of price range. Some are in condition similar to ours, while others are of the same age but really fixed up. I'd love to just list it as is, but not if I could get more by making it more attractive (the interior won't change & kind of "is what it is" - lower ceilings, small kitchen, etc).

I'd appreciate any considerations Bogleheads could share. I've been trying to convince my spouse to sell for a while & it seems he's open to it, so I'd like to move fast before he changes his mind.
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David Jay
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Location: Michigan

Re: Selling investment property - how much to fix up beforehand?

Post by David Jay »

Breezy wrote: Mon May 03, 2021 8:40 amI've been trying to convince my spouse to sell for a while & it seems he's open to it, so I'd like to move fast before he changes his mind.
This.

List it now, the market is hot.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
niagara_guy
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Re: Selling investment property - how much to fix up beforehand?

Post by niagara_guy »

I listed a house with an agent several years ago in a hot market. She suggested we do several small things that would make the house look better for minimal dollars. (This was a single family home.) I think her advice was sound. I would ask the agent for advice on this.
Dave55
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Re: Selling investment property - how much to fix up beforehand?

Post by Dave55 »

I would list it as is and I would price it on the high side of the range or slightly over the high end of the range. You can always come down in price if need be.

Dave
"Reality always wins, your only job is to get in touch with it." Wilford Bion
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Watty
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Re: Selling investment property - how much to fix up beforehand?

Post by Watty »

Fixing anything that is actually broken or worn out likely makes sense because that would be seen as a sign of a poorly maintained property.

I have mixed feelings about painting. On one hand that can make the property look more appealing but on the other hand I also wonder if the seller was trying to cover up some problem by painting over it.

Unless it is something major I would be cautious about scheduling any work that would delay putting the building on the market more than a few weeks because the housing market can change quickly if things like interest rates change.
Breezy wrote: Mon May 03, 2021 8:40 am Our realtor has given us a fairly large range of possible selling prices, and we trust that he is giving us good numbers.
You are going to pay your real estate some significant money for their professional opinion and they know the local market.

For the most part I would tend to follow their advice, or find a different real estate agent that you can trust.
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Breezy
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Joined: Mon Jul 11, 2011 11:38 am

Re: Selling investment property - how much to fix up beforehand?

Post by Breezy »

Thanks, all. We're asking the realtor to run fresh comps and do minimal/obvious touchups and repairs, and then list. Like the first reply stated, the spouse's willingness to sell is the important factor & the one most likely to change.
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