Although it is standard and a good idea to provide prospective buyers with a Pro forma projection of the future financials of the complex. The simple fact is most potential purchasers (and their lenders) will view the previous twenty-four month's operating statements as the actual income stream they are purchasing. So consider any operational changes well in advance of marketing your property, if possible.
A couple items you may want to consider listed below.
Increase Rents
Many conservative apartment owners keep their rents just a little below market to keep the complex competitive and occupancy high while they own them. While this may seem like a good way to operate your property, most serious prospective purchasers (and their lenders) will figure in a vacancy and credit allowance of around 10%, even if occupancy is at 100%. So you may want to consider raising your rents to just a little above market. This will probably cause some vacancies, but as stated above most purchasers and lenders will factor in a vacancy rate whether one exist or not.
Lower Verifiable Expenses
Another way to increase the value of your apartment building(s) is to decrease your verifiable expenses. Each expense does not amount to much separately but combined they can have a large impact on your NOI. Take a look at each expense individually. You should be able to find some reductions.
While it is typical with smaller complexes for the price per unit to be a big factor the purchaser's decision making process, when dealing with the large complexes (100 units or more) it pretty much comes down to the income stream they are purchasing. So here are some definitions you must become familiar with when marketing you property.
Current Value = Net Operating Income / CAP Rate
The Net Operating Income (NOI) which is simple the annual Income minus Expenses, as mentioned above.
The Capitalization Rate (CAP Rate) which is Net Operating Income divided by the Purchase Price. Basically it is the purchaser's return on investment. The Capitalization Rate a purchaser is willing to pay is usually strongly influenced by the local market.
