Apartments for Cheap

Questions and Answers

Your Questions About Apartment Complexes For Sale

December 13, 2012

Nancy asks…

What is the best way to advertise multi unit apartments for sale?

I have six multi units complexes for sale, some are listed on the MLS and some are not. I have listed them on www.listings.loopnet.com/sandra.carter.com but would like to know if there are other sites I can list my property listings for more visiablity?

Administrator answers:

Costar also lists Commercial Property.

James asks…

What’s steps should I take in owning and running an apartment complex?

There are a few apartment complexes up for sale in my area- smaller buildings with anywhere for 5-25 units. They are all in a reasonably good part of town. It occured to me that this might be a great way to live. Own an apartment complex- live in it- run it- and live off of the profit from the rentals. Soooo- I’ve never done anything big like that. I don’t even own a house!! So what do I do to get started?? What steps should I take to own and run an apartment complex? I know I’ll need a loan- where do I go for that? Do I need business licenses? Basically can someone walk me though this?? Thanks in advance!!

Administrator answers:

The best thing to do first is…study the area and properties. If they are listed properties there should be information on the CAP rate (Capitalization rate, money the property produces total/per unit) other items to may be the GIM (Gross Income Multiplier) to find the value of a property, this is sometimes called GRM (gross rent multiplier).
The best way to find out about financing is to find a mortgage lender or broker. Remember that the property is going to be Owner-Occupied (this will help with the down payment.) I’ve lived in/rented out duplex’s and 4-plexes for years and it’s a great investment and without major problems pretty easy to do. Find out all you can before hand and ask other landlords in the area their opinion. Make sure you have enough saved up to make a down payment, don’t forget about taxes, loan costs and incidentals plus maintenance is on you. It’s not just a sit back, get a rent check every month and become rich type of situation it takes time hard work and patience (remember we’re people and all a little odd sometimes:)

Donna asks…

how do i find out if an apartment complex is for sale?

Administrator answers:

Ask the apt mgr
call a local real estate agent

Sandy asks…

I want to convert a multiple building apartment complex to condos for sale. Do I have to convert all units?

Administrator answers:

First, you will need approval from zoning and building commissions to do what you desire. Not all buildings are constructed to the requirements needed for condo conversion. You will discover if that is the case when you apply for permissions.

That being said, if you do gain approval to convert, you WILL have to convert all units. But you do not need to SELL all units. Those you desire to keep will remain in your name, as indidivual units. You can still rent them to others (as long as your condo docs indicate rules for rentals of individual units).

Betty asks…

The apartment I live is up for sale. A 22 unit complex for about 2 mil dollars shall I buy it?

I finished med school and couldn’t pass my USMLE. I owe about 300,000 dollars in student loan. the apartment complex I am living in is for sale for about 2 million dollars. the payment would be about 13000 dollars per month. the income is only about 15 K per month IF all the tenants pay the rent. Shall I risk and buy this complex in hope of selling it next year for about 300 K more so I can pay off my student loans?

Administrator answers:

Check your area vacancy rate. Someone suggested 5%, but I know of areas as high as 30%, and managment as high as 10-15%. $2K a month isn’t leaving yourself much breathing room, how much is taxes a month on a $2,000,000 property? I’ll bet they’re up there.

I wouldn’t pay much more than $750,200 for a property bringing in that kind of money. You have to think about your property margins. I’d be willing to bet you’ll be paying money out of your own pocket to keep this place running before you could sell it for $2.5mil.

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