Are you thinking about investing in apartment complexes?
Now is the perfect time to invest in an apartment complex because the demand for rental properties has never been higher, and money has never been cheaper.
If you’ve never invested in an apartment complex, or multi-family property in the past, this article will provide you with 6tips first successfully investing in an apartment complex.
Tip #1 – Choose The Right Location
The first thing to do before investing in apartment complexes is to choose the right location.
This step should be considered to be essential because the rental market in the United States has changed over the last 12 months due to rent control in States like California and Oregon, followed by economic instability, rioting, and other societal/economic issues.
What classifies a city as being a great location for investing in an apartment complex?
This is a great question to ask. Some of the things that I look for before investing in an apartment complex in a city include low unemployment, low crime rates, steady job growth, easy access to public transportation, things to do in the area, shops, stores, restaurants, and a good public outlook regarding the area’s future.
Thanks to the internet, you can easily research a city online and find feedback about that city written by people who live there so you should not hesitate at taking the time to thoroughly research a location to confirm that it’s going to be a great place for investing in an apartment complex.
Tip #2 – Establish A Target Building Type
One of the great things about investing in apartment complexes is that they are very similar to investing in single-family homes because apartment complexes come in a wide variety of shapes, sizes, and asset classes.
Ideally, when searching for apartment complexes you should choose buildings that have a mixture of 3 bedrooms and 1 bathroom per unit.
This is important because investing in an apartment complex that offers more than just one and two-bedroom units will give you more flexibility and it will also make your apartment complex more attractive to a wider pool of renters in the area.
Since it’s your first apartment complex, you may want to consider investing in a building that has 12 units because smaller apartment complexes are easier for first-time investors to manage themselves and it’s possible to make a nice return on your investment from a smaller building.
Determining the type of apartment complex that you want to invest in is important because it’s also going to provide you with insight into how much you need to charge in terms of the rent and the amount of money that you’re going to have left over for repairs and renovations.
Tip #3 – Do Your Due Diligence
Due diligence is essential, especially when investing in multifamily properties because there’s a lot of money on the line.
You should take your time to thoroughly research a deal before investing in it including paying close attention to the condition of the building, location, and how many available amenities the property has.
You should also take the time to consider the current market rents, expenses, and the historical rents for the property as well.
Taking your time to do your due diligence is going to help you to also calculate what you should charge for rent, and how much you may have to pay for repairs or improvements to the property.
During the process of doing your due diligence, you should be up front with the current owner of the property and ask them for all financials that have been associated with the apartment complex from the past several years. These financials should include income statements, rent rolls, and other expense statements.
When viewing the financials from the current owner, don’t hesitate to question if the information that the information given to you is factual, or incomplete.
It’s also important for you to request a complete list of all maintenance activity during the years that the current owner has owned the property because you want to verify if they’ve deferred any maintenance that you are going to be responsible for taking care of after you purchase the property.
Tip #4 – Talk With The Current Tenants
Since you’re going to be investing in a place where people live, it makes sense to interview the tenants that are currently living there to verify if they’re happy with your apartment complex.
Sadly, many investors who invest in apartment complexes make the mistake of not speaking to the tenants. Don’t let this happen to you.
Make sure that you take the time to talk to the tenants who live in the apartment complex because this is going to give you some insight into what’s going on with the property including if any maintenance issues have not been dealt with, and if the tenants are really happy living in that space.
#5 – Submit Your Offer
If after doing your due diligence, and speaking with the current tenants who live in the property, you decide that it’s the right apartment complex for you, you shouldn’t hesitate to submit an offer on the property.
A word of warning, if you decide to make an offer on the property that’s below that asking price, make sure that you share with the owner specific facts about your offer including comparable sales data, a change in the local economy, or an issue with the building that’s the reason behind your low offer.
Providing the seller with plenty of data backing up your offer is important because, you also can’t assume that their broker is going it articulate your position as a buyer very well so you always want to give the seller a well-written email, or letter, that provides them with plenty of data backing up the reason why you submitted the offer that you did.
#6 – Hire A Property Management Company
Let’s say that your offer is accepted, in this case, it is important to remember this moment and have a mini celebration, then quickly move on to hiring a property management company to manage your new apartment complex for you.
Just because it may be an apartment complex that’s as little last 12 apartments doesn’t mean that you should go gung-ho about managing that property yourself.
Hiring a property manager will save you a lot of time and help you to focus on moving on to your next rental property instead of getting wrapped up in all of the day to day decision making when it comes to managing that apartment complex all on your own.
Contact Trier Capital
Trier Capital is a private equity firm that makes it easy for you to passively invest in lucrative apartment building syndications.
We save investors the time, money, and hassle of investing in apartment complexes themselves. This enables investors to live life on their terms without having to get wrapped up in sourcing, acquiring, and managing multi-family properties.
To learn more about the benefits of partnering with my company, contact me today by calling or click here to connect with me online.