KNOWING WHEN TO SELL THE MULTI UNIT GOLDEN EGG

KNOWING WHEN TO SELL - THE MULTI UNIT GOLDEN EGG

Andrew Macallum - Principal Interest Multi Family Investments

Royal LePage Commercial - Sales Representative - www.principalinterest.ca

February 25, 2022

A true story stuck with me after attending an accounting seminar years ago.? The real-life case study focussed on the owner of a very successful business.? With it being valued in the multi-millions of dollars and holding a very strong position to sell, the owner received an unsolicited bid for purchase.? Despite being of retirement age, the owner believed the company could yield an even higher price and did not accept or sign back the bid.? Within the following year, the golden egg was no more and the company was bankrupt.? There are many takeaways from this experience with the intended message being - know when it is time to sell.

More recently, I have encountered two separate instances involving two unrelated multi-unit owners.? Both had begun their real estate investment journey many, many years prior.? By way of grinding through residential and commercial leases & tenancies; unit upgrades & renovations; not to mention the trials and tribulations of political bureaucracy and property management; both amassed quite sizeable real estate investment portfolios.

In both scenarios, the owners were men who felt strongly that the long term goal for each respective portfolio was that it would be assumed by their immediate family, building intergenerational wealth.? Unfortunately, this didn’t appear to be a meaningful discussion that was had with said family members.? Sadly, both men died after being diagnosed with imminent health conditions.? Their respective families then immediately sold each of the property portfolios.??

Beginning with the End in Mind

Seasoned and savvy multi-unit investors spend a great amount of time planning for the acquisition of a property to make a deal work.? In many cases, due diligence that is performed by a buyer beforehand will lead to a cleaner and more appealing bid to the seller.? The same effort must be spent when developing an exit plan.? Regardless of what that plan is, including family members in the planning can help answer the question - what is the purpose of this investment?? Needless to say that it must include those who are included in a partnership or syndicate, where appropriate.

Beginning with the end in mind is an adage adopted by many investors.? Readers may find the following article helpful, first published by the Financial Post FP Explains: Five things to consider when deciding if it’s time to sell your investment property.? Keeping apprised of market conditions and understanding the cost and tax consequences of selling will aid in making informed decisions about holding or selling a property.??