You may be wondering about how to proceed with the purchase of first apartment building, and also what could happen after purchasing that building. Based on some personal experiences of purchasing first multifamily apartment buildings, we are going to mention the big takeaways. These lessons can help the first time buyers to make the most out of their first deals or expect the unexpected.
There are helpful people
It could serve as the good news for first time buyers and there are people who can help you in your first purchase. Many first time buyers assume that they on their own while proceeding with the process. While feeling lonely, they are more likely to make terrible mistakes and learn their lessons the harder way. So, the solution is to reach out to the people who would have better experience of investing in multifamily apartments.
Inspect only what needs to be inspected
First time buyers are more curious and concerned about the property they are going to buy. Therefore, ask the inspectors to check every inch of the property. Such a practice can be quite costly because there are a lot of areas in the property that you don’t need inspected. You can check those areas by yourself. Nevertheless, you should personally visit every room of the building and do the checking according to your understanding.
Acquiring multifamily apartment building is not easy
You may be expecting the purchase of your first multifamily apartment building to be an easier task but it’s not actually. There would be a lot of transactions you will need to deal with. According to some of the buyers, buying a 40-unit multifamily apartment is as difficult as buying 40 single family homes.
Be harsh while expecting costs
There would be rehab work required in the apartment building at any extent. And costs of that rehab might entirely be on you. So, you need to be ruthless while calculating costs of that rehab work. Be good in calculations, write down the derived numbers and keep those numbers in consideration no matter how lower estimates you get from the others. Use this same approach of underwriting conservatively while dealing with the damage report delivered by inspector.
If you are not being patient, you might lose the deal at all. There can be delays in the process, and some of them can be quite intimidating. The cumulative price may rise due to any pending construction that started after the first inspection. These kinds of roadblocks may frustrate you but you need to keep patience. Insisting too much can sour the deal.
Let the team do the work
It might be OK from learning perspective to get involved in everything while purchasing your first apartment. However, if you are going to invest in more properties in the future, you will need to refrain from getting involved in everything. Let the teams do their task and you focus on the matters that need your attention.