How to Buy an Apartment Building

Purchasing an apartment building can be a great move, as long as you invest in one that conforms to your budget and enhances your financial status. There are a lot of things to think about when you buy an apartment building. Review the following steps before committing to such an endeavor.


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    Learn about the responsibilities associated with owning and managing an apartment building. You should be familiar with the process and understand both the pros and cons before taking on this large undertaking.
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    Get loan pre-approval before shopping for an apartment building. Determine how much of an investment you can afford. If you don't know how much a bank is willing to lend you, you may waste everyone's time looking at complexes that are too expensive. Getting pre-approved is helpful to both you and your real estate agent.
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    Set a budget so you know how much you can afford to pay. Take into account the rent that you hope to receive from each apartment. Calculate the utilities and the amount you should put away for repairs and maintenance.
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    Make a list of all the expectations that are important to you when investing in an apartment building, including how many units you want and how big they should be. Consider the following as you make your list:
    • Opt for choosing an apartment building that has established tenants already living in the apartments. This would mean that you won't have to search for tenants. Find out from the owner how responsible the current tenants are. The eviction process is a long one, so don't get yourself into a bad situation.
    • Decide whether you want a ready-to-move-in apartment building or one that will require some remodeling. The latter case would likely require financing for renovation, unless you already have funding available. If you do need to borrow the money, make sure that you can rent out the renovated apartments as soon as the repairs are completed, so you can start paying off the loan with the added income.
    • Decide whether you will be living in one of the apartments or living offsite. If you live offsite, you may want to live near the apartments in order to respond quickly to emergencies. Otherwise, you'll need to partner with a management company. Another option would be to set up accounts with a plumber, electrician and any other contractor who can be available should there be an issue in one of your apartments.
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    Partner with a trusted real estate agent who has experience in purchasing apartment buildings. Try to get a referral from a friend or family member. An experienced agent can guide you through the shopping and purchasing process. A trusted agent can also help you determine whether or not a particular property would make a good investment. Having a good relationship with your agent can help you feel confident in his/her advice. Let your agent know about your loan pre-approval and your list of expectations so that you are both on the same page.
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    Visit apartment buildings with an experienced buyer. If you are not a contractor and don't know what to look for when shopping for a property, bring along someone who does. You want this to be an investment you can live with for a long time.
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    Compare and contrast various apartment buildings. Take notes on each one, and use them in making comparisons. Narrow the list until you decide which property to make an offer on.
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    Discuss the offer with your agent, and decide what would be appropriate. Expect counteroffers. Only you can decide what you think is fair. You may not get the first property you make an offer on, but when you do finally reach agreement with a seller, your pre-approved loan will help the process go smoothly.
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    Finalize the details of the sale while the apartment building is being inspected. You may be asked to submit further paperwork beyond what you gave the lender initially. Updated paperwork will be filed and an interest rate determined. Read everything before you agree to the loan, including monthly payments, the length of the mortgage, and whether the rate is fixed or variable.
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    Attend the closing. Understand clearly what you are signing no matter how many questions you have to ask. You will sign a lot of paperwork. You may also have to hand over a check or money order for part or all of the closing costs. Once everything is signed, you will be given the keys to your new apartment building.


  • In searching for a property, remember that convenient laundry facilities are very important. Look, too, for private yard areas or decks and common areas. Imagine yourself living in each apartment, and decide if they are to your satisfaction. Make a list of each property, checking off whether they meet your initial specifications. Then add the bonus features of each and any negatives that will help determine your final decision.
  • Look at the potential of each apartment building, not the current d├ęcor. Many buyers get lost in the color of the wallpaper or the layout of the furniture. When shopping for apartments, you need to look beyond anything that can be changed and determine whether the property has potential. Of course, any immediate changes you plan will cost money and affect your ability to afford the property.

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Categories: Buying Property