Not every apartment building is ready for a glossy listing. Maybe the roof is near the end of its life. Maybe half the units need work, or a few tenants haven’t paid in months. Maybe you inherited the building and don’t want to become a landlord.
You can still sell. Selling as-is is common with apartment buildings, and in the right situation it’s the smartest move. Here’s how it works and how to make sure you get a fair deal.
What “as-is” means
Selling as-is means you sell the building in its current condition. You don’t make repairs, and the buyer accepts the property the way it is. The buyer still inspects the building and reviews your records. But instead of asking you to fix things, they factor the cost of repairs into their offer.
As-is doesn’t mean you can hide problems. Depending on your state, you may still have to disclose known defects. Be upfront about what you know. It protects you, and experienced buyers will find the issues anyway.
When selling as-is makes sense
Owners sell as-is for many reasons. These are the ones I see most often:
- Deferred maintenance. The roof, plumbing, parking lot or HVAC systems need major work that you don’t want to fund.
- High vacancy. Several units are empty or not rentable.
- Tenant problems. Late payers, evictions in progress or tenants who damage units.
- Code violations. The city has cited the building, and fixing it would be costly.
- An inherited or long-held building. You’d rather turn the equity into cash than manage repairs.
- Time or money pressure. A loan is coming due, a partnership is ending, or you simply need to move on.
How buyers price an as-is building
A buyer will usually start with what the building would be worth once it’s fixed and fully leased. Then they subtract:
- The cost of repairs, often with a cushion for surprises
- Lost income while units are renovated and re-leased
- Their risk and their time, since the project could take longer or cost more than planned
Here’s a simple example. Say a 20-unit building would be worth $1.5 million fully repaired and leased. It needs $250,000 in work and will lose about $60,000 in rent during the renovation. An as-is buyer might offer somewhere around $1.1 million, depending on the risk.
That can feel low at first. But compare it to what it would cost you, in money, time and stress, to do the work yourself and then sell.
Should you fix it first?
Sometimes it’s worth doing a few repairs before selling. Often it isn’t. Ask yourself:
- Do you have the cash and the time? Major repairs can take months and often run over budget.
- Will you get your money back? Small fixes like cleanup and curb appeal usually pay off. Big renovations often don’t.
- Can you manage the project? Contractors, permits and re-leasing are a job in themselves.
- What happens to your income meanwhile? Units under renovation produce no rent.
If the honest answers point to “no,” selling as-is is probably the better path.
Who buys apartment buildings as-is
As-is buildings attract a specific kind of buyer: investors who know how to renovate and reposition properties. Many of them, like me, pay cash, which matters. A building with major problems can be hard to finance, so buyers who depend on a bank loan may not be able to close.
You can find these buyers through a commercial broker, an online auction, or by going directly to an investor.
How to get a fair as-is offer
Selling as-is doesn’t mean accepting the first number you hear. To protect yourself:
- Gather your records. Even a distressed building has a rent roll and income history. The more a buyer can verify, the less they need to discount for unknowns.
- Get a rough repair estimate. A contractor’s walkthrough gives you a reality check on what buyers will subtract.
- Ask how the buyer reached their number. A serious buyer will explain it.
- Compare terms, not just price. A cash offer with few contingencies and a firm closing date may be worth more than a higher offer that depends on financing.
- Check track records. Ask a buyer which buildings they’ve closed on recently.
- Get advice. Talk with your attorney and tax advisor before you sign.
The upside of selling as-is
- No repair bills or contractors to manage
- A faster sale, often in cash
- No more late-night calls about the building
- Certainty, with fewer deals falling apart over inspections or financing
Thinking of selling your building as-is?
I buy apartment buildings of 5 to 100 units across the Southeast, in any condition. I pay cash, close fast and cover closing costs. Brokers are welcome.
Not ready yet? Download my free guide, Selling Your Apartment Building. It shows you how to put together the rent roll and T-12 that buyers ask for first. Get the free seller’s guide →