As we all know, the time to think about selling, is when you buy.
There is nothing like a power point presentation with charts and demographics to support the position that if you buy it for $50,000, sell it for $80,000 and your expenses are $20,000, your pretax profit is $10,000 per unit.
What's not to like about this deal? It is the "if" word that becomes so overlooked until sales don't meet projections.
Regardless of the market, remember two imperatives, if your primary market is first time home buyers.
First time homebuyers would rather buy a house. If they cannot buy a house, they will look to town homes, because they are the closest thing to a house they can find. Your condo flats are running a poor third assuming competitive pricing. That is why your prices have to be stunningly impressive. "Price" is the ultimate amenity.
Your prices should be at least 20 percent less than the foreclosed single family homes in the neighborhood. For the same price, you will lose part of your market to the homes.
The five most common pricing mistakes for condominiums are easily correctable with an understanding of the principles involved:
- Negotiating prices, which destroys trust in the value. Price it so you can slowly raise prices. Yes, you can!
- Lazy pricing. Not using unit floor, view, and price differentials to establish inventory urgency and basing pricing on square footage alone are not good ideas.
- No incentive to buy now. The buyer has nothing to lose by waiting.
- Not enough price differences for view, forcing the best units goes first, leaving the units with the least appealing views to appear to be too expensive
- Not understanding the critical part 'pricing' plays in building momentum.
If you are a "buy and hold" condominium investor, your job is a lot easier.
If you are a 'buy and retail' condominium investor, think through your pricing and pricing strategy before you make the fractured condominium purchase. It's worth the time and effort.