These are the seven mistakes you must absolutely avoid when you purchase an apartment property. Making any one of these mistakes will cost you literally thousands of dollars at the closing table when you buy. Here they are: Not putting yourself in the buyer’s shoes 5, 10, 15, or even 20 years down the road when you buy your apartment property. You almost want to buy the property over again in your mind say 10 years down the road and ask yourself the following question: Based on the future of the location and condition of the property, will a buyer find this property attractive? If you hesitate on saying yes, you must definitely do more analysis as to the salability of the property and the area.
Not inspecting the entire property prior to closing. To make an offer on the property, of course you have to do an inspection. Well, many apartment and commercial investment property owners do not want to bother ALL of their tenants with an inspection every single time someone has an interest in buying their property. So, what usually happens is, you end up looking at part of the property, not the entire property, before making an offer. (If you were looking at a 48-unit apartment property, you’d probably look at say 6-12 units first and make an offer subject to inspecting the rest of the units.) This is the way it’s typically done; however, one big caution to you, make sure you inspect the entire property prior to closing. This is for two reasons.
It’s amazing what can get damaged between the days that you look at the property and the day that you actually close. Sometimes it can be 30, 60, or even 90 days between the time that you initially look at the property and the time you close. Many, many things can happen between that period of time and most of them detrimental to your cash flow and to your profits. Hidden surprises: Many times when you go through the property the first or even the second time, you could miss something; something of vital importance and something that if caught early, could save you thousands of dollars. For example, I recently went through a 56-unit property with some clients and we totally missed that one of the roofs on one of the buildings needed to be repaired. Actually after we took note of it later on, we actually noticed that more than one roof needed to be repaired soon. The total cost? $32,000. We got the seller to share in half of that cost with us before we took over the property.
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Jacquelyn Donner
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