How to buy an apartment building? You could start with a look in the newspaper, a visit to a broker, or a search online – all good ways. Of course, since you’re looking at the same properties as every other investor, it’s not always easy to beat the competition to the great deals. Is there a better way?
Why not look for properties that aren’t yet for sale, and make an offer? This is how I bought my first home. An ad in the paper stating what I was looking for, brought a call from an old couple that had been thinking about selling. I got a good price, and they saved a real estate agent’s commission. Trying to buy an apartment building this way may be even more likely to succeed.
Buying apartment buildings that aren’t for sale starts with a three step search process. you first decide what you’re looking for. Do you want duplexes and four-plexes, or larger apartment buildings? The second step is to start looking for properties that fit your criteria. Finally, you contact the owners.
How To Buy An Apartment Building From Non-Sellers
First of all, don’t limit yourself to “fixer-uppers” or other “problem” properties that seem more likely to have owners willing to sell. Probably most owners of rental properties have thought of selling, so you can start with almost any building. How can you tell when or why a landlord is ready to call it quits? By asking.
Of course, tact is necessary. When you call the owner, tell him you’re an investor, not a broker. Tell him you like what you see, and you can have an offer ready in a week if he’s interested. What if he’s not interested? Thank him politely and hang up, but send him your card or a letter. Investors often buy from owners that change their minds.
If the owner is interested, explain that you are an investor, so your offer will have to be based on your return on investment. That means you’ll need to see the books, specifically the rent roll, listing the units and what they rent for, plus current occupancy. You’ll also need the total income and operating expenses for the last year.
Pepare a confidentiality agreement ready before you call, and let the owner know you’ll sign it and deliver it before you see the books. It’s possibble he doesn’t want the tenants to know he’s thinking of selling. If so, inspecting the units may have to wait until you make an offer. Just make an acceptable inspection a contingency in the offer.
Why should you buy income properties this way? Because having no competition and no sales commission can mean a better price. Because instead of waiting for that perfect property to be listed for sale, you just find it now. Look for it, find it, and make an offer. That’s how to buy an apartment building.
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