Tips for buying an apartment building
Buying an apartment building can be a great investment. A multi-family property can provide you with an ongoing income and greatly improve your net worth. However, buying such an expensive and large property is a major purchase. Therefore, you need to make sure you make an informed decision when choosing the building itself. Research in advance and learn all about top realty among World real estate. In order to avoid any typical real estate mistakes, follow our guidelines step by step.
Evaluate the reasons for investing in a multi-family property
Recurring income is, of course, the most obvious reason for buying an apartment building. Even though it is expected for you to anticipate the investment return, there are multiple reasons to invest in real estate than just collecting rent.
For some landlords, investing in a new property often includes their personal relocation as well. Moving to a new city, investing in real estate and having a fresh start is an exciting idea. However, planning a nationwide move is a huge and complicated process. Therefore, start planning and assessing the move well in advance.
As owning and managing a multi-unit living space is a challenging and time-consuming task make sure you evaluate your reasons for such an investment. Some people prefer to buy multiple single-family homes and rent them. The benefit of owning an apartment building over a few family homes is the fact that you will be able to lower the maintenance cost. The repairs and repaints can be done with the same tools and materials for numerous apartments.
One of the main concerns for any long-term investor is the vacancy and the expenses that follow it. With a multi-apartment building property, you will be able to cover the costs of vacant units by collecting the rent from the occupied ones.
Things to look for when buying an apartment building
Becoming a landlord requires prior knowledge and preparations. It might not be the easiest job beginning. However, choosing the right building and creating a lease plan will make the whole process much less stressful.
Here is what you need to look for when investing in a multi-unit property:
- Location, location, location!
- The property occupancy and management.
- Unit mix and the building’s amenities.
- Look for professional advice when buying an apartment building.
Search for the right location when investing in real estate
Make sure your building is at a desirable location that is easy to rent. It might be that such buildings will require higher investments. However, having many vacant apartment units in a poor location can cause you to lose money during longer periods of time. Research the real estate markets to watch in 2018. Major metropolitan areas, walkable neighborhoods that have a great transportation system, locations close to major employers and safe neighborhoods… These are all important factors to evaluate when searching for the best location for buying an apartment building.
Is the building vacant?
- Look for the buildings that don’t have a high percentage of vacancy. Having less than 70% of occupied apartments can turn out you building into a bad investment.
- Make sure you look into the way the building is currently managed. It might be that vacancy is high due to poor management. Small factors like leaks and unclean common areas might be easily fixable.
What type of units should your building have?
Buildings with mixed typed apartment units will be easier to rent. Therefore, look for investing in a property that both has small studio and 3 bedroom apartments. Adding amenities and services like laundry, storage and parking can make your property highly rentable.
You don’t have to do it all on your own – Hire the pros to help you!
- In order to choose the right building to buy and make sure you avoid any troubles, consider hiring professional help. A real estate agent, a lawyer, an accountant and a reliable mover should be part of your team. Buying an apartment building includes numerous documents and endless paperwork. Make sure you don’t miss any important red flags by having professionals on your side.
- Request detailed paperwork from the current owners. Reports, contracts, rent rolls and expense statements should be provided to you. Therefore your team of legal advisors will be able to evaluate the investment and protect your interests in the best way possible.
An important thing to keep in mind is that you will need a reliable mover after buying an apartment building. Professional moving companies, like Capital City Movers NYC, can ensure your moving into a new building goes safely and according to all laws and regulations.
Hire an experienced property inspector. Inspecting the conditions of a building structure and its overall safety is crucial for the purchase. Make sure you create a detailed checklist and state all of your expectations to your inspector.
Things to do after the property purchase
Budgeting will be a big part of your investment. Make sure you have some reserves. After the purchase, many small costs like repairs can occur. Therefore, make sure you are prepared for the vacancies and any other issue associated with being a landlord.
Save yourself much valuable time and troubles by setting the ground rules for your tenants. Communicate with them in writing and send them a notice after each phone call or a conversation. Do an initial screening of the potential tenants’ credit and criminal records.
Eviction notices are something no one is looking forward to. However, as a landlord, you need to protect your interests and assets. Therefore, make sure you serve the notices the moment the rent is late. This will ensure your tenants know that there the rules and regulation that need to be followed. Another important thing to do after buying an apartment building is to use state lease agreements, in order to protect your interests and property.