I bought an apartment building many years ago, and it was no easy task. However, it was easier than I thought and I recommend doing it if you are looking to invest in property, but I also recommend doing it with a professional such as Maxwell Realty Inc. With that said, below are a few tips on how I bought my very first apartment building.
1. Get Cash
For starters, I got as much cash together as possible. I did this before anything else because I knew that buying an apartment building would cost a lot of money, possible even more than it would a house. Therefore, I told myself I would gather as much cash as possible over the course of a year.
This meant creating a tight budget and sticking to it. No junk food, no Ubers, no Netflix and so forth. Also, I took up a part-time job and never touched the money for anything. This was going and was used towards the purchase of a building.
The bottom line is the more cash you can get, the better. It means lower loan payments and a better interest rate. On that note, if you have debt, knock it down or eliminate it before buying an apartment building. Trust me, this will make life a lot easier.
2. Decide on The Units I Wanted
After getting cash together, I needed to decide on which type of units I wanted. Did I want a small building that had mainly studio apartments or did I want a large complex that had several studios, one-bedrooms and two-bedrooms? I eventually settled on a complex that had several, but what worked for me might not work for you.
I suggest deciding how much risk you’re willing to take on. Also, weigh the pros and cons of the different types of units. This will make your choice easier.
3. Location Is Everything
Another thing I did was research various locations. I actually ended up buying a building nowhere near me because I didn’t feel that where I was, was an ideal location to buy and rent out apartments. I researched several markets within a 500-mile radius and settled on something in between that distance. I was willing to go as far as 500 miles because I firmly believe location is everything.
When doing market research on locations, take a look at everything. This includes the crime rate in the areas, public transportation, the average age of people living there and what types of entertainment is there. All these should factor into whether or not you buy an apartment building there.
4. Use Several Agencies
I used several real estate agencies because I figured the more I worked with, the better my chances were that I would find the ideal apartment building to buy. I was right, so I highly recommend contacting at least 3-6 agencies in the areas you are researching. If any of them make you feel pressured into buying something, then stop contact with them because they probably only want their commissions.
On that note, it’s a good idea to find an agency that can help you secure financing. Many do, but there are a lot of agencies that don’t. At the very least, they should be able to point you in the right direction.
The bottom line is to get as much money together as possible and work as hard as you can to get cash. Deciding on what you want, doing market research, learning about the demand, getting the right financing and using multiple agencies can all help you too. With that said, good luck if you plan on buying your first apartment building.