- Ensure that apartment investing is the proper real estate investment for you. Expand your investment portfolio and generate higher income potentials. In this regard, you can obtain a higher rate of return.
- Have a specified ideal area and class of your prospective apartment. Determine the number of units and the type and class of your apartment whether luxury or subsidized. Amenities are also important to determine.
- Make a shortlist of apartment buildings in the market by utilizing a quick financial test. Assess the size, location, and several units. Obtain the present occupancy rates and the present rent rolls. Have a figure on the annual income, mortgage payments, and all other types of expenses. You have to go for listings that supply positive cash flows.
- As soon as you find an ideal property, you may want to request for a walk through appointment. Confirm the overall condition of the building, the sizes, and location of the property. Estimate potential expenses.
- Get all the information you need to implement a thorough financial analysis. Come up with a list of monthly income and expenses from t-12 (trailing 12 months of P+L). Compute for your net operating income by estimating your cash flows as well as your cash-on-cash returns. Then, compute for your capitalization rate.
- Present your letter of intent. all exterior deferred maintenance must be included. in the industry if you are a re-trader no one will want to do business with you.
- engage an atty. to write up all documentation and help oversee the risks from the seller.
- Perform your due diligence. Ask the present owner for expense reports and tax returns. Also, get copies of tenant leases as well as the rent rolls. It is also important to know the reason for selling. Investigate the present vacancies of the units. (we have checklists for these if you reach out for them).Ensure to conduct a professional property inspection on a given schedule. Get the services of a professional contractor and inspector. Be sure to walk through the property with a fine-tooth comb so that you will not miss out on any detail. Do not forget crawl spaces and exterior areas. List down your estimates and possible cost of repairs.
- Protect your source of financing in time for closing. Secure loans like traditional or conventional loans. You can also do partnerships to lessen the fund/capital to be released. Syndications are also a great option!
- Sign all the final documentation to seal the deal. Arrange an insurance policy and have security deposits transferred to you. Lastly, sign all the paperwork and you are good to go.
