Posted in Blog  
  on Jun 23, 2014

How to Buy an Apartment Building

Buying an investment property is a little different that purchasing a home with a traditional mortgage. It can be a very profitable business venture, but only if it is done correctly! If you want to know how to buy an apartment building, the first thing you need to determine is the actual returns that will come back to you after becoming the owner. Unless you can prove that the apartment building is profitable, a lender is not likely to finance your business plan.

What else do you need to know?



Shop Around For Your Loan


Although it might seem tempting to take the first offer a lender gives you for the new apartment building, it is important to shop around for your loan. You'll also want to consider whether or not you should pursue a recourse or a non-recourse type of loan.

Recourse Loan: This type of loan is a lot like the traditional mortgage. If you are unable to meet the terms and conditions of the agreement you sign to obtain funding, then you will be held personally liable by the lender and all of your wealth will be at risk.

Non-recourse Loan: This type of loan gives an apartment owner a limited level of liability when it comes to their building. A lender will simply take the property in question if this loan goes into a default status, but that is the only thing that can happen. A lender cannot hold you personally responsible and so your wealth will be protected.

So which loan is right for your new apartment building? Unless the property you're planning on purchasing right now is worth $2.5 million or more, you will not qualify for a non-recourse loan. Plan on having at least 20% of the down payment on hand as well so that you'll be able to receive favorable lending terms.



How Do You Find the Right Building?


Finding the right apartment building is the other critical component to the purchasing process. It's a lot more difficult to find a quality investment opportunity than just looking up local buildings online from your home office! You've got to get to know the buildings and network with other local investors to make sure the apartments you're thinking about purchasing are a good deal.

Is it possible to purchase an apartment building without any money right now? In some specific instances that may be possible, but you aren't going to get a 100% loan from a lender most likely, even if the property in question is immediately profitable. You would need to find additional investors who would be willing to front you the money you need in order to complete the purchase.

A major component of owning an apartment building is to be able to maintain it properly. This will mean setting up relationships with local vendors who can come supply plumbing, electrical, HVAC, and other repairs during emergency situations. In most instances, you only have 24 hours to have health and safety repairs completed, so this final step will help you become successful.

Are you ready to buy an apartment building? Then let's use this information to start hunting.

Related

The Landlord Tenant Board: What it is and When it is Needed

Many times, there are issues between a landlord and a tenant that need to be resolved but are failed to do so, because both parties have gone too far with their actions, and have retaliated in the... More


How to Create a Residential Lease Agreement

Where there is a landlord, there will also be a tenant, and it is no surprise that these two parties can only work together once there is some sort of agreement, contract or a binding deal in place.... More


The Best Sites for Rental and Lease Agreement Templates

Many landlords find it difficult to write and draft a lease agreement. Since every State has its own general template, it can also be difficult to make sure your lease agreement meets all the criteria... More


The Best Landlord Associations for Landlords to Join

If you’re a landlord and want to manage your business in a better way, you should endeavor to get in touch with those industry experts who have the experience and the skills to help you do it. This is... More


Unpaid Rent

When you talk about the most common disputes arising between landlords and tenants, nonpayment of rent has to be there in the list. People rent their properties to earn money, and when a tenant... More


Section 8 Landlord Pros and Cons

If you have ever rented a living space and have had to move many times, you’d already know how difficult it is to find decent, affordable and secure living premises. A person has to deal with the same... More


Landlord Inspection Checklist: Rights, Letters, and Reports

Landlords across the state have the prime responsibility to make sure they inspect and up keep their property once they have rented it to the tenants. Inspections can occur monthly or yearly depending... More


Landlord Maintenance Costs and Responsibilities

Everyone knows that a landlord’s job is not easy. These folks have specific duties and responsibilities that they must perform in order to be fair. Being a landlord is not a position but it is, in... More


When to Withhold Tenant Security Deposit

Asking for a security deposit is quite common in property dealings. The reason to ask for a security deposit is to have something that would help a property owner recover some of their financial... More


How to Report Bad Tenants

Bad tenants are the worst-case scenario for any landlord; no one wants them, and if someone has them, they want them out in any way possible. There are times when landlords try as much as they can to... More