The Los Angeles real estate market is currently more challenging than ever. Multifamily property transactions in LA have seen a marked decline, with reports indicating a decrease in transaction volume by nearly 40% compared to the height of the market during the COVID-19 pandemic. Rising interest rates, increasing anti-landlord legislation, and heightened investor uncertainty have created a volatile environment. In this difficult climate, navigating the sale of your multifamily property can seem daunting. However, following these 10 tips can help you secure the best possible outcome. Additionally, partnering with an experienced multifamily realtor who has successfully closed dozens—if not hundreds—of deals in down markets is essential.

• 1) Prep Your Paperwork

  Before listing your property, ensure that your financial documents are up-to-date. You’ll need a current rent roll and detailed information about the building’s condition, including recent upgrades, remodels, and the age of key systems like the roof, plumbing, and electrical. Having this information ready can increase buyer confidence and speed up the selling process.

  
  

• 2) Talk to the Decision Makers

  Make sure all decision-makers are on board with selling the property. Have a clear plan for how the proceeds will be allocated once the sale is completed. Miscommunication or differing goals can delay or derail the sale, so align your strategy before going to market.

  
  

• 3) Find the Value with an Expert

  Unlike single-family homes, multifamily property sales data is not as easily accessible online. It’s important to work with a local expert who can provide you with accurate market comparables. A professional will review sales comps and give you a realistic idea of your property’s market value.

  
  

• 4) Determining Value is an Art, Not a Science

  Multifamily valuation relies on multiple metrics. Investors look at the Gross Rent Multiplier (GRM), Capitalization Rate (CAP Rate), Price Per Square Foot (PPSF), and Price Per Unit (PPU). It’s important to have a realtor who understands how to balance these indicators, as the numbers can vary based on factors such as rent levels, building size, and unit mix. A specialized agent can guide you through the process and provide a thorough valuation analysis.

  
  

• 5) Know Who You’re Dealing With

  If you are considering selling directly to an investor, understand that you are likely selling below market value. Investors aim to maximize their returns, which means they will often negotiate for the lowest price. Hiring an agent will ensure you have someone working to get you the best price and terms, rather than leaving everything in the hands of the buyer.

  
  

• 6) Maximize the Value with Marketing

  Marketing is key to maximizing your property’s value. Work with a realtor who has a strong marketing platform and specializes in your market. Proper exposure to the right buyers can increase competition and help drive up offers.

  
  

• 7) Choose an Agent You Actually Like

  Selling a multifamily property can be a lengthy process, so it’s important to work with an agent you trust and feel comfortable communicating with. You will be in close contact with this person throughout the transaction, so choose someone who makes the experience as smooth as possible.

  
  

• 8) Ask the Right Questions

  Before hiring an agent, ask these essential questions - How many properties have you sold in the past year? How many in my area? What’s your marketing plan? How do you differentiate yourself from other agents? A strong realtor will have clear answers and a proven track record.

  
  

• 9) Plan Your Next Steps

  Decide what you’ll do with the proceeds before the sale closes. Will you reinvest through a 1031 exchange or pursue other strategies, such as a Charitable Remainder Trust, to protect your investments?

  
  

• 10) Protect Yourself

  Investors often try to renegotiate deals after escrow. To protect yourself, aim to have multiple offers so you have leverage. This ensures you can negotiate from a position of strength rather than settling for less.

Partnering with Experience in a Tough Market

Selling a multifamily property in the current LA market requires not just preparation but strategic execution. As the market has shifted, with rising interest rates and investor uncertainty, now more than ever you need an experienced multifamily realtor on your side. By following these tips and working with the right expert, you can successfully navigate the complexities of this challenging market.