The process of buying and selling multi-unit income producing properties is a bit mysterious and risker compared to single family residential properties. If you could remove some of the risk so that you increase the probability that the sale will close, and at the same time increase the amount of money you can sell or rent your property for, wouldn’t you want to do that?
A lot of time, effort, thought and negotiation go into getting a buyer and seller to agree on the price and terms of a purchase offer. Once an offer has been accepted, the deal is far from done.
There are so many things that can happen that can cause a property to fall out of escrow. To make matters worse, typically when a person buys a multi-unit property, as a courtesy to the tenants, they don’t get to tour the inside of the units until the offer has been accepted. In other words, someone is potentially spending hundreds-of-thousands to millions of dollars on a piece of property that they’ve only seen from the outside! This creates a huge unknown for the buyer.
On top of that, in most multi-unit listings, the inside of the units are not featured in the listing pictures. This can happen for several reasons. For starters, oftentimes, the owner does not have updated pictures on file, and when the property gets listed for sale, the owner doesn’t want to let the tenants know that they are selling the property so they don’t want to ask for permission to enter to take photos. Even if an owner were willing to tell the tenants that they are selling the property, the tenants may not want their personal belongings to be photographed and featured on the internet. Most importantly, the interiors may not be clean, clutter-free and tastefully furnished such that it enhances the property value. Well-executed real estate marketing works for a reason, and showcasing bad pictures of a messy, dirty or poorly decorated interior can bring down the value of a property.
The inverse is also true. Beautiful pictures of a clean, nicely furnished interior can drive up the price of a property.
By not having photos of the interior, this adds a lot of risk for the buyer and the seller. For the seller, they risk entering into an agreement with a buyer who upon seeing the interior either has a large list of things that they don’t like about the condition of the inside so they want credit off of the purchase price, or they may even decide to back out of the deal completely. For the buyer, it’s risky because in order to cause minimal disruption to the tenants, usually the buyer sees the interior for the first time during the inspection, so if the condition of the interior is not satisfactory, they have lost money by paying for the inspection. Also, if they are doing a 1031 exchange, they don’t have a lot of time to waste on a property that doesn’t suit their investment goals This can be costly in both time and money for everyone involved.
There are great solutions to these challenges, that can also help you differentiate your listing:
- Plan ahead. Next time a unit is vacant and it’s clean and ready for the incoming tenants, take high quality photos of the empty interior. It’s easy to take great pictures using your phone, or you can hire a professional. Now you have photos you can use to showcase the interior if you ever want to list your property for sale or for rent.
- Now, let’s take it a step further and really capture the attention of your buyer or renter – virtual staging! Staging a home costs tens-of-thousands-of-dollars and is a great marketing tool for getting top dollar when selling a luxury property. When it comes to income producing investments, profit margins can be slim and owners need to be more cost sensitive. We also want to get the highest return from the least amount of work and investment. With virtual staging, you can get the same results that professional stagers get for a fraction of the cost.
- Post your high-quality, professionally-decorated pictures of your rental interiors and let the advertising do its magic. Going forward, using editing software and virtual staging, you can even change up the lighting, furniture, window treatments, etc. in the pictures to represent changes in style and new trends.
- Be sure to indicate in the listing description that the photos do not represent the furniture of the current tenant and that the interior is virtually staged.
Every agent knows that a clean, nicely decorated interior gets a client top dollar for their property, which is why clients spend so much on staging. Buyers have difficulty visualizing a space and by using virtual staging, this takes the guess work out for your buyer or renter. Thanks to the power of low-cost virtual staging, rental properties can look as stylish as luxury listings.
With the increasing need to do business virtually as well as people’s growing comfort with online transactions, it’s a great time to utilize virtual staging to market your property.
There are many virtual staging companies on the internet that will transform your rental from drab to fab. I have experience working with many of them and I can email you a free guide with a list of my favorite online resources and expert tips for how to get the best virtual staging pictures.
Mercedes Shaffer has a master’s degree in architecture and design from UC Berkeley and is a real estate agent with Pacific Sotheby’s – DRE #02114448. She specializes in 1031 Exchanges and Multi-Unit Income Investment Properties covering Orange County and the surrounding area. For help with buying or selling an investment property, Mercedes can be reached by phone at 714.330.9999 or by email at [email protected].