Buying an apartment complex can be a smart investment decision provided you make the right moves. Selecting the right building, applying for the loan properly and discussing things with professionals can help you take a prudent decision.
image by drtchock
While some buildings are completely residential, there are buildings which are designed for mixed use. Such buildings have a combination of offices and residential units, however a major chunk of it is allotted for residence. You should look for a complex with a grading of C+ or higher. In such a building you cannot rent units on a daily or weekly basis.
Buying apartment buildings are a huge investment decision and you should not hesitate to seek guidance of professionals who can help you make the right decision. Here are a few professionals you should consult with:
• Local real estate agents – Your friendly and trustworthy real estate agent will show you a list of apartment buildings that are on sale and which fits your budget and other preferences.
• Property inspectors – Once you like a property, you would need to hire services of an inspector which specializes in commercial properties. Prior to beginning of the inspection work, you should communicate your expectations and checks you are more concerned about. If the building appears to have too many flaws do not buy it or negotiate discounts which could take care of repair expenses.
• Property attorney – You would need an attorney to write legal documents. He would also check purchase documents, manage escrow, and also investigate the title of the property.
• Accountant – An accountant can help you check the basic investment math and will also help you in tax management.
• Property managers – Once you become the proud owner of the property you can hire services of professional property management companies to keep the building in proper condition and to collect rent on time. Taking help of professionals will keep you free to focus on your core business.
You need to be absolutely sure when applying for a loan. You need to ask yourself whether you are paying a reasonable amount for the property and whether you expect it to pay you decent returns.
Before lending you money, your financial partner would look at the expected rental incomes, mortgages and taxes to calculate the right value of the property. Lending institutions would not be interested in your personal financial health but would be keener to know whether the building can pay for itself.
Your loan approval may be difficult if the building is in poor condition or if it requires high maintenance cost. Similarly, the lender may backtrack if the building complex you are looking to buy has been unable to have 85% occupancy rate 3 months prior to your applying for loan.
Your credit rating and collateral property will also be considered by the lending institution. You should also think of having a partner and if you should take loan as an LLC or a corporation.
Once you are sure for your decision, you should gather your papers for loan application. You can take help of your real estate agent in this matter.
Chalk out an exit plan should you face any financial difficulty or if you no longer wish to own the property. Some of the options you may consider are:
Before you finally sign the deal, make it a point to understand the prevailing market condition as well as the condition of the building. Taking a smart investment decision will offer you rich gains and help you grow your portfolio.
Feel free to Subscribe to our PropertyCluster Blog to stay up to date with our latest posts and information on Real Estate Industry or you can Follow Us on Facebook, Twitter, Pinterest and Google Plus for regular updates.