How to Purchase Apartment Complexes
Purchasing an apartment complex is a big investment that can generate thousands of dollars over time. Some investors look for rundown or mismanaged apartments with the goal of fixing them up; while others prefer to do as little "fixing up" as possible. Investors must learn how to properly inspect and document the property as well as the documents that go along with it.
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Instructions
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Look for apartment complexes with management in place. Most investors prefer to be investors, not property managers. A good income-generating property should easily pay for management.
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Do your research. Investigate other properties in the area and do your own inspection after reviewing the current financial statements and occupancy statistics on the property. Hire an inspector to validate and verify for documentation. If time is a concern, you can insert a clause in the offer agreement that the sale is dependent on the outcome of the inspection. Ask the fire department to do an inspection to make sure the building meets certain building codes--this inspection is often done for free.
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Verify income for the past 24 months. Review rental agreements (signed) and rental histories to see if there are any problem tenants. Review rental deposit information for accuracy and ask where the deposits are kept.
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Review rent level and see if it is under or over the market rent. If there's a variance, determine the reason. Lower rates could be a sign of poor management, which might also present an opportunity. However, raising rates might result in the loss of loyal tenants.
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Contact an agent and make the purchase. Your offer should include all the costs of repairing the property. Use a checklist to make sure you don't forget anything.
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Tips & Warnings
This is not to be construed as legal advice.
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Comments
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I, m all about this :) C.
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I, m all about this :) QC.
