FSBO in Chicago - how to appeal to investors?
February 12, 2014 9:12 AM Subscribe
I own a condo in Chicago (in a trendy neighborhood) in a building that has no rental cap and is mostly renters. I'm interested in trying to sell it myself, and am interested in thoughts on what sort of things I'd want to do to make it particularly interesting to investors rather than owner-residents.
The building has been moving towards investor-renter majority for a few years; I used to live there when I was single but got married, moved out, and now rent out the unit I own. I'm kind of tired of being a landlord, tired of maintaining a unit in a building I don't live in anymore, ready to sort of just get out of the game. It was never fun, and I know I'm lucky to have a pleasant tenant who pays rent on time, but I just don't want to do it anymore.
On the up-side, it's in a very appealing/trendy neighborhood, has condo-quality finishes, the building got a new boiler and the unit new skylights within the past year, rent more than covers my mortgage payments, and it is pet-friendly. On the down-side, it's an 18-unit association that is self-managed by the last remaining residents who own and live in their units, which numbers five.
I am probably not going to break even on selling, but am thankfully not underwater. But because of the rental percentage, mortgages will be hard to come by. We're nowhere near able to offer FHA anymore. It's really a good for an investor who wants a unit to rent out. But I don't know how to find those people, how to market to them, what they want these days, etc. If you've ever been in the market to purchase an investment condo to rent, what were you looking for? What, in listings, appealed to you? I'm in no specific hurry to unload this place, since I'm actually making some money on it and I'm not in a financial crisis, so I'd like to try the FSBO route before bringing in a real estate agent and paying the fees associated with using one. I just would love to have it off my hands.
The building has been moving towards investor-renter majority for a few years; I used to live there when I was single but got married, moved out, and now rent out the unit I own. I'm kind of tired of being a landlord, tired of maintaining a unit in a building I don't live in anymore, ready to sort of just get out of the game. It was never fun, and I know I'm lucky to have a pleasant tenant who pays rent on time, but I just don't want to do it anymore.
On the up-side, it's in a very appealing/trendy neighborhood, has condo-quality finishes, the building got a new boiler and the unit new skylights within the past year, rent more than covers my mortgage payments, and it is pet-friendly. On the down-side, it's an 18-unit association that is self-managed by the last remaining residents who own and live in their units, which numbers five.
I am probably not going to break even on selling, but am thankfully not underwater. But because of the rental percentage, mortgages will be hard to come by. We're nowhere near able to offer FHA anymore. It's really a good for an investor who wants a unit to rent out. But I don't know how to find those people, how to market to them, what they want these days, etc. If you've ever been in the market to purchase an investment condo to rent, what were you looking for? What, in listings, appealed to you? I'm in no specific hurry to unload this place, since I'm actually making some money on it and I'm not in a financial crisis, so I'd like to try the FSBO route before bringing in a real estate agent and paying the fees associated with using one. I just would love to have it off my hands.
I'd include in your description that the sale is a great opportunity for an investor, and list the $ amount you are currently getting in rent, and, if applicable, the higher amount a new landlord could potentially charge based on other rentals in the building. With an investor the typical flowery descriptions extolling the great finishes! luxury amenities! spiel is much less important than the actual financials.
You may want to call around local realtor offices and identify agents that focus on investment sales--not to hire them, but so you can send the sale information around to those agents who can then pass on to their clients--but you will most likely, depending on your area, need to offer a small commission % to an agent who brings in a buyer--but this would still be 50% less then the amount you would pay an agent to list and sell the condo.
posted by syrenka at 9:24 AM on February 12, 2014
You may want to call around local realtor offices and identify agents that focus on investment sales--not to hire them, but so you can send the sale information around to those agents who can then pass on to their clients--but you will most likely, depending on your area, need to offer a small commission % to an agent who brings in a buyer--but this would still be 50% less then the amount you would pay an agent to list and sell the condo.
posted by syrenka at 9:24 AM on February 12, 2014
You can find out if there is an owner who owns multiple units in the building already and contact them directly. That is the person most likely to buy, but you can start with every owner in the building.
Real estate transactions are public records, so just use the building address and make a spreadsheet of owners. Send a form letter to them all:
Want to buy another condo in the building? Want to cut out the middleman and save?
Go from there.
posted by Ruthless Bunny at 9:33 AM on February 12, 2014
Real estate transactions are public records, so just use the building address and make a spreadsheet of owners. Send a form letter to them all:
Want to buy another condo in the building? Want to cut out the middleman and save?
Go from there.
posted by Ruthless Bunny at 9:33 AM on February 12, 2014
A friend of mine was able to find a buyer by going to open houses of similar properties and surreptitiously handing out flyers to the people he saw looking there and posting on nearby telephone poles.
Regarding the selling price - if you're selling to someone who will be getting a mortgage the most they can offer is what the bank will appraise the property for, so it may be worth paying an independent appraiser to find out what that is in advance. (An agent will tell you they can get you more but ultimately has a strong incentive to push you to sell for less.)
Worst case, at least use an agent affiliated with Redfin or similar who will give you a rebate on the fee.
Of course, take this FWIW - I have a huge bias against the real estate system. There are certainly many honest and decent individual agents, but overall its a horrible racket in America. If you're selling for $300,00, that 5% fee is $15,000 out of your pocket - probably the difference between you making money and losing it, a cost which would never be supported if they did not have an effective monopoly on real estate information and sales. But that monopoly also means you're at a huge disadvantage when you try to do it on your own.
posted by RandlePatrickMcMurphy at 1:08 PM on February 12, 2014
Regarding the selling price - if you're selling to someone who will be getting a mortgage the most they can offer is what the bank will appraise the property for, so it may be worth paying an independent appraiser to find out what that is in advance. (An agent will tell you they can get you more but ultimately has a strong incentive to push you to sell for less.)
Worst case, at least use an agent affiliated with Redfin or similar who will give you a rebate on the fee.
Of course, take this FWIW - I have a huge bias against the real estate system. There are certainly many honest and decent individual agents, but overall its a horrible racket in America. If you're selling for $300,00, that 5% fee is $15,000 out of your pocket - probably the difference between you making money and losing it, a cost which would never be supported if they did not have an effective monopoly on real estate information and sales. But that monopoly also means you're at a huge disadvantage when you try to do it on your own.
posted by RandlePatrickMcMurphy at 1:08 PM on February 12, 2014
Best answer: I invest in real estate in Central Florida. I currently own 21 homes, and am in contract to buy another.
For real estate investors, it is all about the numbers. I would work up a sheet running numbers - total expenses: monthly mortgage, Condo fees, taxes, basic insurance - total profit: monthly rent. One paper, the monthly income should be higher than the expenses.
I would also include a statement about projected value of the property over the next 15years, and a realistic assessment of any expected renovations needed.
Most real estate investors use private money, so they are paying between 5 and 8% on the mortgage right now. Do not calculate the mortgage based on bank rates. Banks do not really work with real estate investors.
Finally, the place to market you condo is at a local REIA (Real Estate Investment Assoc). REIA's are networking groups for real estate investors that can be found all over the country. With a quick google search I found www.careia.org/ - which is the Chicago Area REIA.
posted by Flood at 4:38 AM on February 13, 2014
For real estate investors, it is all about the numbers. I would work up a sheet running numbers - total expenses: monthly mortgage, Condo fees, taxes, basic insurance - total profit: monthly rent. One paper, the monthly income should be higher than the expenses.
I would also include a statement about projected value of the property over the next 15years, and a realistic assessment of any expected renovations needed.
Most real estate investors use private money, so they are paying between 5 and 8% on the mortgage right now. Do not calculate the mortgage based on bank rates. Banks do not really work with real estate investors.
Finally, the place to market you condo is at a local REIA (Real Estate Investment Assoc). REIA's are networking groups for real estate investors that can be found all over the country. With a quick google search I found www.careia.org/ - which is the Chicago Area REIA.
posted by Flood at 4:38 AM on February 13, 2014
This thread is closed to new comments.
posted by JohnnyGunn at 9:16 AM on February 12, 2014