Are you a commercial property owner who purchased an industrial building 4, 5, or 6 years ago?
If so, you may feel the pressure of your loan note coming due. With interest rates now at 6.27%-8.5%—up from 2.85%—you may wonder if it’s time to refinance or sell your property.
We all say we want to sell high and buy low, but do we actually do it?
Although it seems simple, human behavior continually contradicts the principle of ‘buying low’ and ‘selling high.’ When times are tough in the stock market, and shares begin to drop, panic kicks in, and sell-offs are at their highest levels.
Are you seasoned enough to be able to sell at a high and buy at a low when it comes to your commercial property? Identifying a peak in the market and timing your sale accordingly is virtually impossible. So what can you do?
Let’s explore why this might be the perfect time for you to sell your industrial building:
Selling During a Seller’s Market
The current market is a seller’s market, meaning that sellers have the upper hand in terms of pricing and sale. This is excellent news for those looking to sell their industrial properties, as it means they can get higher prices than usual, even if they don’t make their debt coverage ratio.
This is especially true for those who purchased industrial buildings four, five, or six years ago when the interest rate was lower and are now facing higher interest rates on their notes due to increases over the past few years.
Opportunities for Buyers and Sellers Alike
The current market also presents opportunities for buyers as well. As competition increases among buyers, prices go up, as do terms of sale, such as longer loan maturities and higher loan-to-value ratios, making financing easier for buyers.
This provides an opportunity for both sides of the transaction—sellers can get top dollar for their properties and buyers can purchase industrial properties with favorable loan terms that make financing more accessible.
Maximizing Your Profits
Although this is a great market to sell in, there are still some things you should keep in mind when selling your commercial property.
First, knowing what comparable properties are selling for is essential to maximize profits. It’s also important to understand how zoning laws may affect potential buyers and how any pending changes could impact them down the line. Finally, all paperwork must be completed correctly and efficiently to avoid delays in closing.
Doing these things will ensure that you get top dollar for your property in a timely manner while avoiding any potential complications down the line.
Successfully investing in any asset class requires tremendous knowledge, preparation, and experience. While it is possible to “buy low and sell high” in theory, real life offers no guarantees. Even seasoned investors can be caught off-guard by an asset’s trajectory.
Trying to time the peak is an endeavor doomed from the start. Instead, focus on sound research, create diversified and balanced portfolios, and understand risk management principles for reliable returns over the long term.
If you purchased an industrial building a few years ago when interest rates were lower than today, now might be the perfect time to consider selling your property before interest rates rise even further and put additional strain on your finances.
The current market is a seller’s market with plenty of opportunities for both parties involved in a transaction—sellers can maximize their profits while buyers can obtain favorable financing terms—so now is definitely the time to act if you want to take advantage of this unique situation!
Are you ready to buy or sell your commercial property but are unsure where to start?