How To Buy An Income Producing Apartment Building

Posted on February 21, 2008
Filed Under Business |

You could start with looking in your daily newspapers, a visit to a real estate broker, or a search online is a very good way to start. Of course, since you’re looking at the same properties as every other investor, it’s not always easy to beat the competition to the great deals but there is always a better way?

Why not look for properties that aren’t yet for sale, and make an offer? This is how I bought my first home. I read ads in the paper stating with what I was looking for, I started making several calls to for sale by owners. I got a good price, and I saved a real estate agent’s commission. Trying to buy an apartment building this way may be even more likely to succeed.

Buying apartment buildings that aren’t for sale starts with a three step search process. you first decide what you’re looking for. Do you want 10 units or a 60 unit apartment building? The second step is to start looking for properties that fit your criteria. Finally, you contact the owners.
First of all, if you are new to investing don’t start with fixer-uppers. You should consider 10 or 30 units and see how you can manage them. Usually most owners of apartment properties have considered selling, so you should start with motivate sellers of apartment building.

Stop by units in your neighborhood and take a look at a few vacant units. Ask the manager if the owner would be interested in selling? Explain to the manager or owner that you are an investor, not a broker. Let them know you are very interested in buying the complex, and you can have an offer ready in a week if he’s interested. If this owner is not interested don’t give up keep looking until you find an owner who is ready to sell. Leave your contact information with the owner or manager to contact you if there is a change of mind. Maybe not today but tomorrow.

If the owner is interested, let him or her know that you are an investor, so your offer will have to be based on your return on investment. Take time to let the owner know you’ll need to see the leases of the tenants, specifically the rent roll, so you can see what the units lease for, plus current occupancy. You’ll also need the total income and operating expenses for the last 2 years.
Prepare a confidentiality agreement ready before you call, and let the owner know you’ll sign it and deliver it before you see the books. Usually the seller doesn’t want the tenants to know he’s thinking of selling. A total inspection of the units should be done after the due diligence period. . Just make an acceptable inspection before your offer is made and put a clause in the contingency.

Why should you buy income properties? Because income properties generate a larger income. Because instead of waiting for a property to be listed for sale, you go seeking for it yourself in your spare time. Look for it, find it, and make an offer. That’s how to buy an apartment building.

Mary Evans is a writer and a commercial consultant of apartment, multifamily and income producing properties.

Share This

Related Posts

Comments

Leave a Reply




Close
E-mail It