Are your relationships with your tenants deteriorating, and are you finding it increasingly difficult to collect your rents? Is your building aging, and you do not wish to undertake the necessary renovation work? Are you facing a recurring vacancy problem?
If you own an investment property in Brussels or elsewhere in Belgium, these are perhaps the main reasons that lead you to consider selling it…
Whatever the reason for your choice, read this article specially written by us to guide you through this step and to make this very particular real estate transaction as successful as possible.
Selling an Investment Property: 2 Options to Consider
If you are preparing to sell your investment property, two options are available to you: you can either sell it as a whole to a single buyer, or sell it unit by unit to several distinct buyers.
Which approach to choose and what are its advantages and disadvantages?
The Block Sale
The block sale involves preserving the current configuration of your building and selling it in its entirety to a single buyer. This type of transaction will generally interest three types of investors:
- The individual looking for an investment solution that allows them to generate recurring rental income and ensure a more comfortable retirement. This type of buyer will generally decide to continue the leases of any current tenants.
- The investor who will carry out all renovation work before reselling the building as a whole at a higher price.
- The investor who will divide the building into several units before reselling it unit by unit with the aim of making a capital gain.
Due to its direct and non-transformative nature of the property concerned, the block sale is generally easier and quicker to implement.
Indeed, selling the building to a single buyer will limit the number of visits to organize and simplify the banking and notarial procedures related to the transfer of a property.
Furthermore, selling as a whole will limit the transformation work that would have been necessary if several units within the building had to be individualized.
However, although the block sale is less restrictive, it will generally be less attractive from a financial point of view. As proof, it is estimated that the amount of a block sale of an investment property is between 5% and 20% lower than if it had been marketed as several units.
The Sectional Sale
Unlike the block sale, the sectional sale involves dividing the building into several independent units and selling each newly created unit to a different buyer. This type of sale will primarily interest individuals, and often young couples looking for their first apartment.
As mentioned above, the sectional sale of an investment property will generally be more lucrative and therefore more attractive for the selling owner.
Nevertheless, several factors may deter you if you do not have a certain mastery of the subject and a little time…
- The extensive transformations required to individualize the different units within the building will involve the intervention of a surveyor, pre-cadastration, municipal authorization, as well as the establishment of the future co-ownership.
- Selling unit by unit involves selling several real estate properties, and therefore dedicating significantly more time and energy to the overall sale of the building. This is especially true as the simultaneous offering of several identical properties on the market can sometimes lead to an excess supply at a given moment, and thus additional delays in selling all the units concerned.
- Finally, while the block sale most often attracts investors with significant purchasing power, the sectional sale will rather interest more conventional buyers, many of whom are first-time buyers who will need more time to raise the necessary funds for the purchase of their future home (be aware of the suspensive conditions for obtaining a mortgage loan).
Less Time or more Money?
Depending on your seller profile, the aforementioned elements should allow you to opt for one method or the other. The block sale will facilitate and accelerate the sale of your building but will very likely be less profitable than a sectional sale, which, if you are willing to dedicate time to it, will certainly provide you with a better return.
We hope this article will guide you and help you make the right choices… And if you wish to be assisted in the sale of your investment property by a passionate team, you know who to contact!
