Selling Side-by-Side 3 Flat & 2 Flat in Chicago's Austin Neighborhood
The commercial brokerage team at Root Realty represented a single owner selling their 5-unit investment property. The two neighboring brick buildings were purchased about seven years apart and had both been held by this investor for almost ten years. This case study covers the high points of that transaction
Property Highlights:
- Property Type – side-by-side 3 flat + 2 flat, Multifamily
- Building Size – 6500 sqft combined
- Lot Size – 7,500 sqft
- Year Built – 1913
- 5 units combined
- Unit mix – all 3 BR, 1 BA
- 3 uncovered parking spaces. Ample street parking available
- 3-flat with furnace in each unit. Heat is tenant paid
- 2-flat with boiler in basement. Heat is building owner paid
- gross income: $72,000
Deal highlights:
- Sale price: 3-unit $309,000 and 2-unit $218,000
- Total: $527,000
- Price per unit: $105,400
- Widely listed on both Loopnet and the MLS
- Provided a limited number of tours
- Sold in less than 60 days for full asking price
How We Brought Value to the Deal:
This seller story is driven by this investor’s desire to start spending winters in a climate that is conducive to warm-weather fishing. The owner had come to believe that the buildings would be difficult to sell and had made some efforts to sell them himself over the years.
A valuation meeting was set and pricing based on comparable sales was presented. Based on the quality of the buildings and the excellent tenant line-up it was decided to set the price aggressively. Pleased with the possibility of selling at that price and with Root’s capabilities we were hired.
As soon as the listings hit the market we fielded more than 30 showing requests. The Root Team stays between the seller and manages this chaotic process. Potential buyers had to submit proof of funds before a showing could be scheduled. After the sorting and vetting only 6 out of 30 request could be granted.
Before hiring Root the owner tried unsuccessfully to sell the buildings to other nearby building owners at lower prices. Now there the subject of intense demand simply by effectively marketing to a wider audience. Reaching the market of potential buyers with well-organized offering and listing information has real power.
Separating Serious Buyers from Time Wasters
Showings had to be managed with a minimum of tenant disturbance.
There are two categories of buyers that need to be identified and managed to succesfully do that. The first is the low-ball offer players who show up everywhere, criticize the building, the location and condition and then offer much less than its worth. That group has been around forever and they play a valuable role in the marketplace. But they weren’t the right group for these buildings and they did not need to see the occupied apartments.
The second is relatively new in the marketplace, agents that are paid on a per showing basis. Frequently this group will press for tenant disturbing showings and not have much interest or capabilities or even awareness of the quality of their clients. By setting showing appointments for small groups at fixed times an “open house” of sorts can be set up that only includes common areas and the basement. With these limitations, usually just the truly motivated and capable actually show up. Those who do attend also get some visible competition.
Conclusion
Offers came quickly. Negotiations followed. Contingencies were reduced or eliminated and, even though they had been marketed as a pair, the seller was able to yield the full asking price for both properties by selling them separately. We were able to manage that process effectively and get to the closing tables (twice on the same day!) in a very timely fashion.
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