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Buying an apartment complex (16 unit property)


I am buying my first apartment complex, a property with 16 units. I am a bit nervous about it. I am buying this on the retail market meaning through a realtor. What questions should I ask the realtor?


Here are a few important questions to ask:
  1. Why is the Owner Selling?
  2. How long has the owner owned the building?
  3. When was the last time mechanicals were updated?
  4. Can the owner provide two years Schedule E's (annual tax declaration of rental income)?
  5. If he does not want to give you a copy of schedule E, can he at least provide a current rent roll and income expense statement?

Once you have the building financials you will have a lot more. If they cannot provide satisfactory answers to all of the questions listed above I would be a little suspect.

Other questions beyond the rent returns are:
  1. How old are the units?
  2. What's the unit mix ( how many 1 br. 2 br etc)
  3. What's the vacancy factor in the area?
  4. What is the vacancy of the units?
  5. What are market rents in the area?
  6. Are there any other units in the area for sale?
  7. If so at what price?
  8. What are the going Cap rates in the area on multiple units?
  9. Have any other Units in the area recently sold?
  10. If so at what price?
  11. How much does the seller owe on the units?
  12. If there is a loan, is it assumable?
  13. Will the seller carry a second?
  14. Is there any deferred maintenance?
  15. If so, estimated cost of maintenance?

Generated 0:01:17 on May 24, 2019