How to Buy an Apartment and Complex

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How to Buy an Apartment Complex
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Step 1

• Decide if you want to purchase a residential
  apartment complex of a mixed-use building.
• A mixed-use building has a combination of
  office and residential units, but at least 80 of
  the space has to be residential. The complex has
  to have a grade of C or higher. This means you
  cant rent the units daily or weekly, and the
  units cant be single-occupancy, as in a rooming
  house or motel.

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Step 2

• Ask yourself these questions before you
• Consider applying for a loan
• Is the price reasonable?
• Will I be able to finance it? Is it a profitable
  enterprise? Lending institutions look at rent
  income, taxes and mortgages to calculate an
  accurate value of the property for financing. In
  the eyes of commercial lenders, your personal
  financial state is not as important as the
  buildings ability to pay for itself.
• Do I have a good credit rating?
• Do I own property that I can use as collateral?
• Should I consider taking out a loan as a
  corporation or Limited Liability Corporation ?
• Will I be able to manage the apartment building
  by myself, or will I have to pay a property
  management company to handle tenant problems or
  maintenance issues that may arise?
• Should I consider a partnership?
• Is the building in good condition?
• Will I be able to increase the value of the
  building?

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Step 3

• Gather information about the building you
• would like to buy.
• You may not be able to get a loan if the building
  will require excessive maintenance, or if the
  complex has not had 85 occupancy for the three
  months immediately preceding your loan
  application.

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Step 4

• Talk to other commercial real estate investors.
• Ask them about the pros and cons of owning an
  apartment complex.

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Step 5

• Talk to local real estate agents.
• Get their advice about the location you have in
  mind. Inquire about the possibilities of future
  zoning changes or any public works projects that
  may impact an income producing property. If there
  are plans for a regional airport to be built a
  few miles away in the next few years, for
  example, you might find it difficult to rent out
  your residential units. Dont assume that
  everything will remain static look at the past
  history of the location and try to imagine any
  major changes that could be likely to take place
  in the future.

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Step 6

• Consider your end goal - the reason you want to
• buy the property.
• With that in mind, figure out what your exit
  strategy would be should you encounter financial
  difficulty, or if you decide you no longer want
  to own an apartment complex. Three exit
  strategies to consider are Convert the units to
  condominiums and sell them to homeowners.
• Take advantage of the 1031 Exchange. Under U. S.
  law, you can exchange your real estate asset tax
  free instead of paying the capital gains tax when
  you sell the building.
• Refinance the property. Use the equity you have
  acquired to buy another piece of commercial real
  estate.

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Step 7

• Have the building inspected by a
• professional who has experience
• inspecting commercial buildings.
• Make sure the inspection covers every aspect
  dont settle for a standard inspection, which may
  not include trouble spots, such as a wet
  basement. Pay extra money if you have to for a
  thorough inspection that goes above and beyond
  what is required by mortgage lenders. If the
  inspection reveals serious flaws, dont make an
  offer, or reduce your offer amount by the amount
  it would cost to make the necessary repairs.

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Step 8

• Assemble the documents you will need for the
• loan application.
• Your real estate agent will be able to assist you
  in this. Most lenders require the following
  documents, but your lending institution may
  require more Your personal financial statement
• Documentation of the propertys current rental
  income.
• The buildings operating income statements or
  Schedule Es for the past two years.
• The buildings year-to-date operating income
  statement.
• The monthly breakdown of income for the building
  for the previous 12 months.
• Current photographs of the building.

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Resource for Buying Property in Greater Noida

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