It’s a Family Affair.
It has been my experience as a Trusted Adviser when dealing with the assets of others, confidence in my ability to serve their needs ranks first.
Recent engagements have me involved with family legacy real estate assets, soon moving into the hands of adult children who do not know how to preserve and maintain these holdings. The family’s CPA contacted me and related how his clients need real estate guidance now that their father has passed.
There is an interesting challenge with one of the apartment houses the family owns. The subject property (40 units) was acquired by the father several years ago. In review of the property and its attributes, my research uncovered that it was originally built to condominium specs. In place and recorded was a condo map setting out the specs for each unit, as well as the common area, the garages and air space. Further, I confirmed that the HOA plan had been established.
Why is all of this important? I presented the facts to the family and suggested they consider selling the property to a “For Sale” developer. As a condominium project, this sale would fetch more than if it was sold as an apartment house.
The real value of my relationship centered on my background and experience to see the “big picture,” in order to create the profile of the property as a condo conversion versus the value as an apartment complex.
We are in the midst of putting a “package” together: making budgets to upgrade the property to current market expectations; review and make current, documents for the prospective buyer to use; as well as obtaining the Department of Real Estate’s approval. Because the original plans called for a condo project, we will not have to make changes to the structures (sound walls, underground utilities, etc.). In addition, requirements from the Fire Department appear to be met.
Our discussions have centered around how to market and sell the property.
Once all the underlying documents are approved, the family will be in a good position.
The objective is to eliminate challenges from a buyer who is a negotiator looking for contingencies to control the property. We intend to have 100% of the requirements in hand: take all the air out of issues, let the buyer purchase the property ready to go to market. Saving time and aggravation is important.
Another challenge is to locate a lender who will finance a condominium project. Not all lenders know or like a condo project. This is another topic altogether.
The apartment house is performing well with high occupancy, which is important while the planning and sale are orchestrated. This is not a slam dunk; there are many parts to assemble to get to the finish line.
The family is not certain they want to be in the real estate business despite how hard their father worked to accumulate their now legacy assets.