What to Avoid When Buying Your First Apartment Building
Buying an apartment building can provide you with a reliable, passive stream of income, help you build long-term wealth and even set you up for an early retirement. However, the outcome of your investment will depend on the time and money you dedicate to buying a profitable multifamily property. To ensure the success of your apartment building investment, here are 7 mistakes you will want to avoid:
- Buying Solely on Future Appreciation—There is absolutely no better way to make a bad deal than to buy an apartment building solely on future appreciation. Smart multifamily investors know to buy based on current cash flow. (Appreciation can also be an added bonus.)
- Not Having Local Market Knowledge—Before you decide to buy a property, it is important that you conduct research on the local market. Not only will this help you determine the value of the property, but it will also help you determine how attractive the property is to your future tenants.
- Buying in Your Own Name—There are added risks when you purchase an apartment building in your own name. Most multifamily investors who are knowledgeable buy in a corporate entity to limited their personal risk exposure.
- Mixing Your Personal Assets with the Property—Although most multifamily investors are smart enough to purchase their investment properties under a corporate entity, unfortunately there are still some that mix their personal assets with those of the property. This can be especially risky when it comes to tenant deposit accounts that are protected and governed by state law.
- Self-Managing Your Property—Some multifamily investors make the mistake of trying to manage their property themselves instead of hiring an experienced property management company that will be more efficient. Experienced investors use their time finding new investments opportunities and overseeing their property managers rather their spending their time managing their property.
- Not Executing Due Diligence—Due diligence is arguably the most important step of the buying process because it allows you to verify income and expenses, review leases and active contracts and inspect the physical property. Skipping this critical step can be costly.
- Not Hiring a Professional Multifamily Property Advisor—An experienced multifamily investment advisor will prevent you from wasting time and energy, feeling extremely frustrated, or, worst of all, stuck in a bad deal.
At 100Units.com, we know that buying multifamily properties can be a challenging process. Our multifamily property investment advisors are experienced in providing investors like you with the confidence and peace of mind that comes only from working with highly-driven and passionate multifamily property investment advisors. If you are interested in acquiring an apartment or mobile home park in Central Florida, contact us today and allow us to tell you exactly how we can help you secure a profitable property at the right price.