Everyone I know that gets or already has the Real Estate Landlord Itch at one point or another inspires to own their first Multifamily Apartment Building. Purchasing a building is one thing but, successfully purchasing a building are two totally different principals. While adding multiple units to your portfolio with one purchase can be very tempting make sure you DO YOUR HOMEWORK! The last thing you want to do is jeopardize all the hard work, effort and equity you have already put in operation.
While there are a million different mindsets and theories when it comes to purchasing Real Estate one truth always stands alone… If it hasn’t done it in the past why could it be done in the future. A very very very wise (and successful) Real Estate Investor taught me it is possible to change the future of certain properties if you do your research. Just because you wake up and believe you can do it isn’t good enough here… Be sure to ask yourself WHY can I do it??? Changing your mindset is one thing… Changing others mindsets are a totally different blog! FYI… An acceptable answer here isn’t “Because I am ME”.
Use the basics and don’t over think things when it comes to purchasing and repositioning a property.
Without giving all of the answers to the test here are a few things I look for/require answers to before placing any hard money on a deal.
How honest, willing and able are the sellers (This judgment skill will come with experience in deals)
What does the Seller stand to gain from the sale of this property
Find the true reason this property is for sale
What is the sellers timeline… Can it be extended?
What are the sale comps
I put together a rental growth forecast based on occupancy trends, dates current leases expire and how much rental growth is necessary to get to my exit sale number.
VACANCY!!!!! If a property has had 100% occupancy for ten years then the current owner is not maximizing his investment. Is it a stable investment yes but it can’t be producing as much income as possible.
AUDIT THE LEASES CAREFULLY… Check the Leases for accuracy, ask for bank statements that show the rent checks match the monthly rents and ask for a current rent-roll every month that you are in the buying process. Stay on top of this as if you don’t this can cause a serious mess when you take over!!!
Make sure to realize the security deposits… they will at one point become a liability on your end. MAKE SURE TO CAPTURE THEM AT SETTLEMENT THEN ESTABLISH AN ESCROW ACCOUNT SHORTLY THERE AFTER.
Looking for additional information on this process, contact Ernie L. Facchine at the The Facchine Group for your Multi Family needs.www.thefacchinegroup.com www.thefacchinegroup.org www.facebook.com/thefacchinegroup @facchinegroup (twitter) firstname.lastname@example.org