Berkeley Duplex: Sold – 7 offers on day one!
The Omicron variant has thrown a bit of a delay in people going back to the office, but hopefully as we get over this hurdle, we will see rents rising! Although most companies are delaying the new flex work plan of 2-3 days in the office, we will get there soon. I’ve had a lot of inquiries from renters looking to move to Oakland/Berkeley as they plan to start going into the office.
The multi-unit market is still going strong through the holidays! The Berkeley duplex listing that I got on the market on December 11th is a good example. After a few months of prep work, we set an offer date a few days after posting the listing.
Results: This property had a lot of deferred maintenance, so I guided all buyers to submit offers without an inspection contingency. We had seven offers, six were all cash. Seller accepted an offer at 10% over asking price ($625,000) and we closed on January 4th, 2022.
Here is the reaction from the seller:
“We tasked John to sell a troubled duplex that had been in our family for generations. With his experience selling local multi-family properties, he performed the impossible and sold it, with all of its issues, and its was only on the market for 5 days. After six months of preparation, we are grateful for his expertise.” – Saena H. (owner of 1365 Neilson, Berkeley)
Outlook for East Bay rents
- Rents are slightly higher month over month in San Francisco.
- Renters who left the Bay Area at the start of Covid are now being asked to come back to work, at least a couple of days a week.
- This will positively effect East Bay rents. Upon a review of listings on Craigslist, the asking rents are very close to the rents before Covid.
- With a lot of companies offering “hybrid” flex work schedules, tenants are still looking for a “Work From Home” layout, if possible. This may be a permanent change, but we will see.
If you are having trouble getting a vacancy filled or have questions, please reach out. Remember that it is better to do a “temporary rent reduction” rather than lowering the rent. This is true for existing tenants and new tenants.
Current Sales Market
If you are thinking about selling in the next 6-12 months, then starting the process now would be a good idea. The market is strong, as buyers are still paying prices based on income that is similar to Pre-Covid. Also, current interest rates for loans are so low that buyers are being aggressive.
Then the issue that has come up is: How do I defer the capital gains taxes.
1) Delaware Statutory Trust. Click DST Tax Deferral
2) Doing a 1031 tax deferred exchange.
With regards to doing a tax deferred exchange, I have spent some time searching in solid markets (Seattle, Austin, and Reno) for both commercial Triple Net (NNN) opportunities and multi-units that are all delivering at least a 5% CAP rate return.
I did a presentation on increasing your rental revenue at the East Bay Rental Housing Association in last year. Click Here: Maximizing the Return on your Investment for the highlights.
Please reach out if you are interested in getting more information on the DST option or 1031 exchange.
My most recent transaction, a duplex in Berkeley, went into contract at $50,000 over list price, very short closing and no issues. If priced right and marketed fully, sellers are getting very strong offers.
Current Market For Building Sales
For example, if you want to sell your apartment at this time, I can help you with an evaluation and guidance.
I have spoken to two of the top lenders for East Bay multi-units and they are working on, and closing transactions at this time. I can forward their contact info if you want to speak with them.
Right now, If buyers have a good down payment they can get a loan and I can navigate you through the process.
It is always important to get guidance and advice from experienced multi-unit brokers who will market your property extensively to all potential buyers and brokers. Posting a new building on all websites and sending out emails blasts gives the property visibility to literally tens of thousands of potential qualified buyers.
Looking forward a strong year and a great 2022!