Exit Strategies For Pompano Beach Small Multifamily

Thinking about your next move for a small multifamily in Pompano Beach but not sure which exit will deliver the best outcome? You are not alone. Many owners want clarity on whether to refinance, sell, convert to condos, or use a 1031 exchange to defer taxes. In this guide, you will see how each path works in Broward County, what timelines to expect, how buyers and lenders look at your numbers, and how to prepare so you can move with confidence. Let’s dive in.

Pompano small multifamily snapshot

Small multifamily in Pompano Beach spans two worlds. Duplexes and 2–4 unit properties trade like residential, while 5–50 unit buildings follow small-balance commercial rules. Industry sources commonly define small multifamily as 5–50 units, which matters for available loan programs and underwriting standards (what counts as multifamily).

Across Broward in 2024–H1 2025, rent growth stabilized and vacancy remained relatively tight, with asking rents per unit often around $2,300 to $2,350 and average sale pricing in the mid‑$200k per unit range. In Pompano Beach, recent activity spans from single‑ to low‑millions for 2–10 unit deals, while larger clusters can trade in the low‑ to mid‑$200k per unit band. A portfolio example is the 62‑unit Cresthaven Apartments, announced at about $14.0M, which illustrates pricing scale for garden‑style assets in the area (Cresthaven report).

Refinance and hold

Refinance‑and‑hold lets you unlock cash, fix your rate, or extend your loan term without selling. In Pompano Beach, it is a strong fit when your current NOI supports a lender’s DSCR and the property is stabilized.

• Agency small‑balance programs serve 5–50 unit assets. Freddie Mac Optigo SBL offers fixed 5, 7, or 10‑year terms, up to 30‑year amortization, interest‑only options, and typical DSCR tiers near 1.20 to 1.35 with LTV often 70 to 80% in strong markets (Freddie Mac SBL details).
• Fannie Mae Small Loans provide streamlined financing for 5+ units, commonly up to 80% LTV with amortizations up to 30 years, and minimum DSCR around 1.25 for stabilized properties (Fannie Mae Small Loans).
• Local and regional banks can be flexible for 2–4 unit assets or short‑term value‑add plans.

What to expect on timing:

• Pre‑underwriting: 1–4 weeks to gather documents and get feedback.
• Full underwriting and third‑party reports: about 30–90+ days depending on program.
• Agency loans often require standardized inspections and replacement reserves.

Pros and cons:

• Pros: potentially lower debt cost, fixed rate stability, cash‑out without a sale, and tax deferral while you hold.
• Cons: you keep management duties and market risk, and you may face fees or prepayment penalties on existing debt.

Quick next step: organize a clean T‑12, current rent roll, and cap‑ex history, then request term sheets from a small‑balance lender and a strong local bank to compare DSCR‑limited proceeds.

Condo conversion basics

Converting a rental building to condominiums in Florida can be profitable, but the process is highly regulated under Chapter 718. You must plan for tenant rights, disclosure, reserves, and inspections before you can sell units (Florida Chapter 718, Part VI).

Key legal points to plan around:

• Tenant timing rights. After a written “notice of intended conversion,” tenants may have statutory lease extensions of up to 270 days in certain cases. After you deliver full purchase materials, tenants generally receive a 45‑day right of first refusal. You must deliver those purchase materials within 90 days of the notice.
• Converter reserves and inspections. You must prepare inspection reports that disclose component age and remaining life, estimate replacement costs, and fund converter reserves pro rata at unit sale.
• Municipal filings and code compliance. You must handle required filings and confirm local code and building‑safety standards with Pompano Beach officials.

Budget and timing:

• Expect professional fees for legal work, engineering and inspection, HOA setup, surveys and title, plus marketing and initial HOA funding. The statutory filing costs are modest, but your professional and carrying costs drive the budget.
• The calendar from decision to first closing often ranges 6–18+ months, depending on tenant mix, building condition, and sales pace.

When it works in Pompano:

• It can pencil for low‑density garden buildings near strong demand corridors when per‑unit condo sale prices exceed your basis plus conversion and sales costs. If your property needs heavy structural work, or absorption would be slow, a conversion may be less realistic than a straightforward refinance or sale.

Quick next step: run a conversion feasibility model with local condo comps, timeline and reserve assumptions, and engage a Florida condo attorney before issuing any tenant notices.

Sell stabilized vs value add

You can sell your property as a stabilized cash flow asset or as a value‑add opportunity. The right choice depends on your current NOI, your appetite for renovations, and your desired speed.

• Stabilized sale. Buyers focus on in‑place NOI and historical performance. More lenders and agency programs are available for stabilized assets, which can improve pricing and certainty of close (Fannie Mae Small Loans).
• Value‑add sale. Buyers price to a pro forma NOI after renovations, which means higher headline cap rates but discounted pricing at close. Execution risk shifts to the buyer, and due diligence may be heavier.

Practical steps before listing:

• Prepare a clean T‑12, current rent roll, and a normalized expense schedule for your stabilized case.
• Build a conservative value‑add budget with permit timing, unit‑turn costs, and a realistic lease‑up.
• Have your broker market to both buyer pools and compare net proceeds and certainty.

Local signal: Small‑ to mid‑sized multifamily in Broward remains active across buyer profiles. Pricing flexes with interest rates and supply, so use fresh comps and recent closings in your submarket to set expectations.

Use a 1031 exchange

If you plan to sell and reinvest, a 1031 like‑kind exchange can defer federal capital gains taxes when you buy qualifying replacement real estate. Two timeframes are strict: identify replacement property in writing within 45 days of your sale and close within 180 days. A qualified intermediary must hold the proceeds to preserve the exchange (IRS Publication 544 overview).

Important planning points:

• Engage your qualified intermediary before closing your sale, and set exchange instructions with title and escrow.
• If your replacement requires financing, start lender underwriting early so you can close within 180 days.
• Replace equal or greater debt to avoid taxable “mortgage boot,” or add cash to cover any shortfall.
• Consider reverse or improvement exchanges if timelines are tight; these require specialized structures within IRS safe harbors (IRS ruling and guidance).

DSTs as a backup:

• A Delaware Statutory Trust interest can qualify as replacement property, which can help if you need a passive, quick‑close option. DSTs are sponsor‑managed and have operational limits described by the IRS, so match them carefully to your goals (IRS ruling and guidance).

Quick next step: interview a QI and your CPA now, model debt replacement, and build a short list of three target properties before you list.

Local case studies

• Refinance example, 8 units. An 8‑unit comp near Pompano traded around $1.85M in May 2025. At 70 to 75% LTV, a refinance could range near $1.30M to $1.39M, subject to DSCR and program terms. Agency small‑balance loans or a local bank could fit, depending on your rent roll and property condition.
• Sell strategy, 10 units. A local 10‑unit package around $1.4M shows how smaller assets transact. If your in‑place NOI is clean and occupancy strong, a stabilized campaign can push pricing. If rents trail market and units need turns, a value‑add pitch can widen the buyer pool.
• Conversion scale, 62 units. The $14.0M Cresthaven Apartments sale highlights how larger clusters can achieve scale pricing in Pompano. For 5–20 unit buildings, conversion works only when condo sale comps support costs and timeline (Cresthaven report).

Build your team

Minimum pros to engage early:

• Multifamily lender or mortgage broker with Freddie Mac SBL and Fannie Mae experience for refinance options (Freddie Mac SBL).
• Real estate attorney with Florida condo conversion expertise if you are considering a conversion (Florida Chapter 718).
• CPA or tax advisor versed in 1031 exchanges, plus a qualified intermediary (IRS 1031 overview).
• A local title company that handles commercial closings and understands state taxes and recording.

Data to prepare now:

• T‑12, current rent roll with lease terms and deposits, operating statements, cap‑ex history.
• Unit‑level rent comps, recent insurance and utility bills, any open permit or code documents.
• Photos, floor plans, and a summary of recent improvements.

Exit readiness checklist

Use this 30‑day plan to get decision‑ready:

1. Numbers and documents

• Pull T‑12, current rent roll, and trailing 3 months of bank statements.
• Normalize expenses and confirm current NOI.
• Note loan terms, maturity date, and any prepayment penalties.

2. Strategy modeling

• Build a refinance case with DSCR and LTV targets using two lender types.
• Price a stabilized sale using in‑place NOI and fresh comps.
• Draft a simple value‑add budget with a realistic rent roadmap.

3. Legal and tax

• If exploring conversion, schedule a consult with a Florida condo attorney to review Chapter 718 timelines.
• If planning a sale, interview a qualified intermediary and align with your CPA on debt replacement.
• Confirm closing costs and state taxes so net proceeds are accurate.

4. Go‑to‑market prep

• Assemble a light data room: financials, leases, cap‑ex, photos.
• Outline a marketing narrative for both stabilized and value‑add buyers.
• Pre‑screen lenders for the refinance backstop even if you plan to sell.

Putting it all together

You have four clear paths in Pompano Beach: refinance and hold for stability and cash‑out, convert to condos when condo pricing justifies the timeline and cost, sell stabilized for speed and certainty, or sell into a 1031 exchange to keep your capital working tax‑deferred. The right answer comes from your numbers, your timeline, and how much execution risk you want to take on. When you line up the team early and build both stabilized and value‑add cases, your exit becomes a choice instead of a guess.

If you want a local, investment‑minded partner to help you price, prep, or source replacement deals across Broward and nearby markets, connect with The Kotelsky Group. We blend hands‑on investor experience with polished marketing to help you move decisively.

FAQs

What qualifies as “small multifamily” in Pompano Beach?

• Many lenders and programs treat 5–50 units as small multifamily, which affects loan options and underwriting; 2–4 units typically follow residential mortgage rules (multifamily overview).

How long does a refinance take for a Pompano small multifamily?

• Plan on 1–4 weeks for pre‑underwriting and about 30–90+ days for full underwriting, appraisal, and third‑party reports, especially with agency small‑balance programs (Freddie Mac SBL).

Under Florida law, what tenant rights apply in a condo conversion?

• Tenants receive strict timelines, including possible lease extensions up to 270 days, a 45‑day right of first refusal after full materials, and detailed disclosure and reserve requirements for the converter (Florida Chapter 718, Part VI).

What are the key 1031 exchange deadlines for Broward sellers?

• You must identify replacement property within 45 days of your sale and close within 180 days, with funds held by a qualified intermediary to preserve tax deferral (IRS Publication 544).

Do I need to replace my existing debt to fully defer taxes in a 1031?

• Yes, your replacement property debt must be equal to or greater than the debt you paid off at sale, or you need to add cash; otherwise, the shortfall can be taxable “mortgage boot” (IRS Publication 544).

Are DSTs a practical backup replacement in a 1031 exchange?

• Often yes; DST interests can qualify as replacement property and can close quickly, but they are passive and have IRS‑described operational limits, so confirm suitability before committing (IRS ruling and guidance).