Off-Market Property

Cash flowing properties are excellent wealth builders that can add a tangible asset to an investment portfolio.  Unlike stocks, investors can see and touch their properties.  In addition, real estate offers tax advantages not available in other investment vehicles.  Cash flowing properties allow investors the opportunity to have their tenants pay down debt and build equity in a tangible asset.  At Black Diamond Realty, when we are asked to market a strong, cash flowing property, we consider various strategies to personalize a plan that ensures the success of both the buyer and the seller.  In many cases, these strategies involve varying levels of confidentiality.

Black Diamond Realty offers multiple real estate investment listings that we keep off-market and in-house, rather than publicly advertised.  In terms of traditional real estate sales, this might seem counterproductive.  However, when it comes to investment property, this type of strategy can actually have negative consequences on the value of the asset, or eliminate the marketability of the asset altogether.  There are multiple reasons for this occurrence:

• Investors Want to Have the Inside Track on an Asset

Investors actively seeking to acquire large assets can be turned off by on-market investment properties.  Why?  Well, the first question we typically get asked is, “Why has this property been on the market so long?”  Many investors strive for exclusivity when looking at deals.  Having the property on-market can create a stigma, an inclination that others have already passed on the asset.  Investors want to know that they may be one of only a few parties looking at the deal.  Because of this, here at Black Diamond Realty we have a targeted list of investors we reach out to when our company acquires the exclusive listing on an investment property.  Typically, these investors already have a fair amount of investment property in their portfolios. 

• NIMBY-ism

Some particular properties we’ve been asked to market offer a great development opportunity, or the opportunity to add value to the existing asset.  New development is a contentious topic in many communities, and we’ve encountered instances in the past where a few people can torpedo the sale of a property simply because they don’t want to see anything built on the property, or they have competing interest in surrounding property.  When it comes to highly desirable developable property, it is a good idea to keep a tight lid on the circle of communication.  As the saying goes, “Loose lips sink ships.”  It is no different when it comes to confidential real estate transactions. 

• Can Give Wrong Impression to Public

Oftentimes, income producing properties are sold while occupied by tenants in good financial standing.  If a commercial building with occupying businesses is listed publically for sale, it can give the false impression to the public that the occupying businesses are selling and/or that the landlord is looking to get out.  This is typically not the case, but this false impression may actually cause the businesses to suffer, as current customers may look elsewhere for alternative purchasing options. 

• Tenant Conflict

Desirable cash flowing properties are typically occupied with paying tenants.  While rare, tenants who learn of an impending sale may begin to slack on rent payments or stop paying rent altogether.  This usually applies to multi-unit investment property, where a property owner may be dealing with less sophisticated tenants that believe their obligation to pay rent ends with the current landlord’s ownership of the property.  When this happens, the current net operating income is negatively affected, which can ultimately undermine the property’s valuation and make the asset less marketable.

Black Diamond Realty currently has multiple in-house listings that offer a good investment vehicle for potential investors.  If you have interest in being added to our list of preferred investors, please e-mail us at:  RSmyth@BlackDiamondRealty.net.