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Lessons Learned from Selling Assets During Covid

There’s no question that the COVID pandemic has impacted just about everything you can think of, including the impact that it’s had on commercial real estate and multifamily properties in particular. When COVID first began its deadly march across the US, many people in the multifamily real estate investment space had dire predictions. Vacancy rates that would decimate sponsors and investors, extensive bad debt, and tenants who had no intention of ever paying their overdue rent were amongst concerns.

Fortunately, those predictions never materialized. In fact, despite COVID, many property owners were able to actually increase rents, and, in some of our properties, by double-digit numbers. In addition, partly due to the American Recue Plan and other government subsidies, tenants were able to continue paying their rent throughout the pandemic.

Factors Impacting Our Decision

Our typical hold period with multifamily properties is 3 to 5 years. That is based on our business model of buying Class B assets with a value-add intention, and that amount of time is more than enough to renovate the units and capture increased rents and greater appreciation when we sell.

During COVID, however, we were acutely aware of taking advantage of any opportunities that came along, as there was still uncertainty in the multifamily market. We were not sure if the market would remain stable, or what impact the pandemic might have on our properties at the end of our projected hold period. That’s when an opportunity came along, and I decided to sell early.

Several factors came into play that prompted me to sell early. In our case, we wanted to take advantage of the fact that the market was a solid sellers’ market; there was a shortage of deals, compressed cap rates, and more distressed assets in the US. Simultaneously, the assets we wanted to sell were doing well, as they were highly occupied, and we’d successfully continued increasing rent rates. We knew that investors would like them and would be willing to pay a premium for them.

In addition, demand for multifamily properties in Atlanta, where our properties were located, has been on the rise as more potential buyers are moving from other markets like Chicago, New York, and San Francisco into Atlanta. This created a larger pool of potential buyers. In addition, buyers are moving to different asset classes, such as from office and retail, into multifamily properties. The demand remains very strong, and we held numerous tours from prospective buyers interested in our property.

The bottom line in my decision was that when we ran the numbers, we exceeded the investors’ projected return. We had projected a 16.5% IRR, and we achieved above a 25% IRR. If we were not hitting the investors’ expected return, there would be no need to exit early. But with above a 25% IRR, there was no need to wait three more years to sell based on the original hold period. The timing was too valuable to not seize for the benefit for investors.

Buying Practices During COVID

Buyers and investors are going to do their due diligence whether there’s a pandemic or not. What surprised me, however, was just how quickly due diligence could be done even during the Coronavirus Pandemic. In order to shorten the due diligence period, you can sign an access agreement, allowing buyers to start performing their due diligence while negotiating the sale agreement. This tactic can shorten the closing period.

3 Tips for Selling an Asset During COVID

Based on my personal experience, I have developed 3 tips for selling an asset during COVID-19. They’re designed to make the process go smoother and help prevent any surprises from happening while waiting for the deal to close.

Tip #1: Start Preparing your Property for a Sale Way in Advance

This is true regardless of whether you sell during a pandemic, but is especially true in COVID times. I started preparing my assets for a sale many months before I was ready to take them to market. Preparing assets meant taking care of deferred maintenance ahead of schedule, to make sure that the properties are well presented to buyers and have good curb appeal.

We also reviewed our financials and tried to analyze them from a buyer’s point of view. Once we found some items that might look unfavorably to potential buyers, we work diligently with our property management company to improve on those items.

Tip #2: Choose the Right Buyer

I’ve seen some buyers offer a high price on a property in order to get the deal, and then try to find all types of negative problems with the asset, so they can try and lower the purchase price. When you choose the right buyer, you won’t run into those types of problems. Credible buyers always close a deal at the agreed upon purchase price and never try to renegotiate or re-trade.

A re-trade puts the seller in an awkward position, because when the buyer insists on having the price lowered and the seller doesn’t comply, the seller will have to cancel the deal and re-market the property. These types of buyers intentionally misuse the due diligence process to try and renegotiate the price without any justification. Many sellers are now adopting a “no re-trade” policy.

To maintain an excellent reputation in the market as a seller, and to avoid having to deal with re-trades and renegotiated deals from irreputable buyers, get recommendations from brokers when choosing a buyer. Taking the properties to market with a broker and considering their recommendation on the right buyer while weighting in the different offers, helped us choose the right buyers, who did not try to re-trade after signing the sale agreement. In the early days of COVID, I’d heard enough stories about buyers who tried to re-trade after their financing terms had changed (as lenders changed their exposure to risk), but if a buyer has an nonrefundable deposit, then a seller does not have to agree to the new pricing, and the buyer will have to walk away from their deposit.

Tip #3: Create a Process to Handle “COVID Units”

Unique challenge that both buyers and sellers have had to deal with since the outbreak of COVID was completing your diligence on “COVID units”. During a normal due diligence process, the buyers’ reps walk each and every unit to make sure that they’re all in good shape. However, due to COVID, entering 100% of the units has been a challenge. Some tenants may refuse to let the buyers’ reps in to complete the due diligence, because they were afraid to contract COVID, and some tenants may get sick and as a seller, you don’t want to expose the buyers’ reps (and your people) to COVID.

One way of dealing with COVID units is agreeing on a set amount per unit that the buyer cannot access. Another way is to set some time after closing for the buyer to access the units to settle any claims in case the units are in bad shape. And in a strong seller’s market, you have more options as a seller, but I always try to be fair and treat buyers the way I’d like to be treated if I bought this asset.


After the pandemic hit the US, many investors in multifamily properties feared that their investments would be decimated, due to high vacancy rates and high bad debt on rents. That never happened, and instead of a negative impact, we were able to increase rents, often by double-digit numbers.

Because of the uncertainty in the market, we decided to sell early when we received an excellent offer, and not wait for the full hold period. Demand for properties was very high, and instead of earning the 16.5% IRR as we projected to our investors, we ended up achieving above 25% IRR.

From personal experience, I have developed 3 tips for selling assets during COVID. First, prepare your property for a sale ahead of time. Second, choose the right buyer. You can get recommendations from brokers or vet buyers in other ways, but what you don’t want is a buyer who tries to renegotiate or re-trade the price. Finally, find a good mechanism to overcome the hurdle of limited access to units due to COVID.

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About the Author

Ellie is the founder of Blue Lake Capital, a commercial real estate investment firm specialized in multifamily investing throughout the United States. At Blue Lake Capital, Ellie partners with both institutional and individual investors to grow their wealth by achieving double-digit returns by investing alongside her in exclusive multifamily deals they usually don't have access to.

A defining factor of Blue Lake Capital’s strategy is founded in utilizing machine learning/artificial intelligence throughout the course of all acquisitions and asset management. This advanced technology enables the company to produce accurate and data-driven forecasting for all assets on a market, property, and even tenant basis. In doing so, Blue Lake is able to lead commercial investments with the full capabilities of today’s technology.

Ellie is the host of REady2Scale , a podcast that highlights honest, insightful, and thought-provoking discussions on the multiple approaches for successful real estate investing.

She started her career as a commercial real estate lawyer, leading real estate transactions for one of Israel’s leading development companies. Later, as a property manager for Israel’s largest energy company, she oversaw properties worth over $100MM. Additionally, Ellie is an experienced entrepreneur who helped build and scale companies by improving their business operations.

Ellie holds a Masters in Law from Bar-Ilan University in Israel and an MBA from MIT Sloan School of Management.

You can read more about Blue Lake Capital at and learn more about Ellie at


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