Sell an Apartment Building in Washtenaw County, MI

Selling a Washtenaw County, MI apartment building comes down to the rent roll, the condition and the leases. Prominent Cash Offer buys Washtenaw County, MI apartment buildings as they are, tenants in place, with a written cash offer based on the income the building actually earns, not on a list of repairs to make first.

How an apartment building in Washtenaw County, MI is valued: net operating income

Buyers of apartment buildings in Washtenaw County, MI start with net operating income, or NOI: what the building itself earns in a year after its operating costs. NOI leaves out your mortgage payments, depreciation and capital improvements, so two identical buildings with different loans have the same NOI. It is the number every serious offer for an apartment building is built on.

• Gross potential rent: every unit at its current lease rate
• Minus vacancy and credit loss: empty units and rent that isn't collected
• Plus other income: laundry, parking, storage, pet or utility reimbursements
• Equals effective gross income
• Minus operating expenses
• Equals net operating income (NOI)

Current rents versus market rents

The rent roll shows what each unit pays today. Market rent is what a comparable unit in Washtenaw County, MI would lease for now. When in-place rents sit below market, because of long-term tenants, rents that were never raised, or units covered by local rent rules, a buyer weighs that upside against how quickly, and whether, rents can lawfully reach market under the existing leases and local law. Rents above market get the opposite question: will they hold at renewal?

Occupancy and vacancy

Physical occupancy (units leased) and economic occupancy (rent actually collected) are not the same thing. A buyer of an apartment building in Washtenaw County, MI looks at the trailing twelve months of collections, current delinquencies and any tenants in eviction, how long vacant units have been empty, and whether each vacancy is rent-ready or needs a full turn before it can be leased.

Operating expenses

Real operating expenses decide the NOI, so buyers ask for the trailing twelve-month profit and loss statement, the latest property tax bill and the insurance declarations. They also add costs an owner-manager may not pay in cash today, such as professional management and replacement reserves, because the next owner will.

• Property taxes and insurance
• Owner-paid utilities: water, sewer, trash, common-area electric, gas
• Repairs, maintenance and unit turnover
• Management (budgeted even if you self-manage)
• Landscaping, pest control and service contracts
• Replacement reserves for future capital items

Leases and security deposits

Leases stay in force when an apartment building sells. A buyer reviews every lease's rent, term, expiration, renewal options, concessions and any side agreements, and many larger sales include estoppel certificates, in which tenants confirm their lease terms in writing. Security deposits are usually credited to the buyer at closing because the obligation to return them passes with the building. State and local law governs deposits, notices and tenants' rights; see HUD's tenant rights resources.

Deferred maintenance and capital expenditures

Capital expenditures are the big, infrequent items: roofs, boilers and HVAC, plumbing and sewer lines, electrical service, windows, parking surfaces, and fire and life-safety systems. Deferred maintenance is work that is already due. Buyers price both in, because they will fund them after closing. Selling an apartment building as-is means you don't pay for them first; the cost is reflected in the offer instead. Buildings from before 1978 may also contain lead-based paint; see the EPA's lead guidance.

Cap rates, where real market evidence supports them

A capitalization rate is NOI divided by price: a building with $150,000 of NOI that sells for $2,500,000 trades at a 6% cap rate. Cap rates differ by market, building size, age, condition and location, and they move with interest rates, so a cap rate only means something when recent comparable sales support it. We don't quote a cap rate for Washtenaw County, MI without that evidence. Your written offer shows the income, expenses and assumptions it rests on, so you can check the math yourself.

How Prominent evaluates a tenant-occupied apartment building in Washtenaw County, MI

Prominent buys apartment buildings in Washtenaw County, MI as they are, with the tenants in place. We review the rent roll, the trailing twelve months of income and expenses, the leases and deposits, occupancy and collections, the building's condition and capital needs, and comparable sales. Nobody has to move out, you don't renovate units or raise rents first, and the written offer explains how each of those inputs shaped the price. For the tax side of selling investment property, see IRS Topic 409, Capital gains and losses.

Share the address of your Washtenaw County, MI apartment building. If it's a fit, the written cash offer shows the amount, the terms and the closing date you choose. No fees, no commissions, no repairs, and no obligation to accept.

Prominent Cash Offer buys Washtenaw County, MI apartment buildings directly, with no listing. Read the full guide to selling an apartment building, see how we buy houses in Washtenaw County, MI, or compare apartment buildings across Michigan. We buy apartment buildings nationwide too. For state services, start at Michigan.gov.