Four Things To Look For When Buying An Apartment Building
Buying an apartment building is a good first step into the world of real estate investing in residential properties. With several units in the same building, it's easier to keep track of tenants and check on your holdings. But what should you look for in an apartment building? How can you tell the difference between a good apartment building to buy and a bad one? Here are four important qualities a good apartment building should have.
1. Desirable Location
Make sure the apartment building is in a good location; this means you will have an easier time finding tenants. Buildings near the bus stop, near main routes, and near busier business parks are good bets. Apartment buildings in more rural areas, on the contrary, are not the best buys because you may have a hard time finding potential tenants who want to live there.
2. Structural Soundness
If the building needs some cosmetic maintenance, such as new paint or new cabinets, that's one thing. Getting this sort of work done is relatively inexpensive. What you do not want, however, is a building that is structurally unsound. A building with cracks in the foundation, big leaks in the basement, or a roof that is going to cave in is more trouble than it's worth. Fixing such issues with tenants in the apartments can prove very difficult.
3. Good Tenants
If there are current tenants in the building, find out as much as you can about them. Have they been paying on time? Have they left the apartments in decent condition? If the building has a history of attracting not-so-good tenants, you may have to deal with a lot of evictions during your first weeks of ownership, and this can be difficult.
4. Properly Segmented Utilities
Some apartment buildings were once single-family homes and were later converted to apartments. As a result, the utilities were never properly divided between the units. When this is the case, the landlord is usually left to pay the utilities. This arrangement can work for some people, but it is less preferable than buying a building in which the utilities have been properly segmented.
If you find an apartment building with the above qualities, then talk to an inspector and have them take a look at the structure. If the building passes inspection, then it is time to sign a contract for the purchase! You're about to be the owner of your first apartment building.