Small Investor's Classroom
How to Buy an Apartment Building
How to Buy an Apartment Building |
| You're in the market to buy an
apartment building. You've made an offer on a nice 4-plex
and now you're about to do your walk-through inspection.
What do you look for? How do you use this information?
How do you determine the difference between a major
problem and a superficial problem? It is a very good idea to hire an independent home inspector. He will look for and see things you may never have thought existed. Don't be afraid to ask questions while doing the inspection, also bring a pad for notes or a tape recorder. This will help you keep track of each unit later when going over your Counter Offer. Jot down any thoughts, comments or concerns you may have during the walk-through. This will help you remember details later. If the concern is very important, take a picture. Ask as many questions as you can during the inspection. The more you know about the physical shape of the property the better. The building may look very good from the outside, |
but may harbor hidden faults that
may turn-out to be very expensive to fix. It is better to
know this up front and be able to back away from the
property or adjust your offer accordingly. Don't expect
the apartment building to be fault free. Most of the
properties in Orange County are 25 to 40 years old. Be sure to turn on all the faucets, check for proper pressure. Does the building have galvanized or copper piping? If the property has galvanized pipes, look closer at the condition of the plumbing. Consider the cost of re-piping. Don't forget to flush the toilets, fill the tub and sinks. Watch for slow drains. If the bathtub or bath sink is slow, this may indicate a hair or tooth-paste clog. This is a minor problem. If the toilet is slow to drain, it may be too old. Slow kitchen drains may indicate grease in the lines. Also check for any large trees along the sewer lines. Many inspection companies do not evaluate the condition of the roof. This |
may be the most expensive part of
any building. Hire a roof inspector. It will be money
well spent. A bad roof doesn't mean you should not buy
the building, only that the sales price should reflect
the condition. The amount of problems a building has or
does not have is beside the point. What is the point is
that you know about the problems and are able to make an
educated and informed decision. A building in poor
condition may be a great deal at the right price. Happy
Hunting! Jerry L'Ecuyer is the owner of JLE Property Management & Maintenance and is currently serving on the Board of Directors for the Apartment Association of Orange County: He has been involved with apartments as a professional since 1988. Jerry can be reached by calling: (714) 778-0480 or visit the office at, 202 E. Broadway in Anaheim, CA 92805 Jerry@JLE1.com |