Questions to Ask When Evaluating an Apartment Building Deal

Let's discuss how to quickly evaluate an apartment building deal. With so many deals available, it's crucial to determine which ones are worth your time. Here are five essential questions you should always ask:

1. What is the net operating income (NOI)?
2. What is the asking price?
3. What is the upside potential?
4. What is the deferred maintenance?
5. Why is the seller looking to sell?

Let's delve into a bit more detail about these questions:

First, it's important to find out the NOI. This is crucial information because it helps determine what type of income the property generates and what expenses are being incurred. You will need to verify their income and expenses later, but for now, use the figures they provide.

Next, take the NOI and divide it by the asking price to determine the cap rate (the financial return of the property if you paid all cash).

For example, if the NOI is $35,935 and the asking price is $650,000, then the cap rate is 5.5%. This is a good rate for a property located in a desirable area.

If you don't know the asking price or are attempting to determine what you should offer, then you will need to find the market cap rate for similar properties in that area. One option is to ask brokers or property management companies.

For example, if the NOI is $550,000 and the market cap rate is 9%, then a fair price would be $6,111,111.

Here are some rule-of-thumb assumptions that can help you run some numbers if you don't have all the information:

• Assume between $3,000-$3,500 expense per unit per year if no expenses are given.
• Assume a 25% down payment, 5.5% interest rate, amortized over 25 years with a 10-year balloon payment if you have no idea about debt service.

NOTE: these assumptions are not always accurate, and should be used initially to run some numbers and determine if the deal meets your buying guidelines. To truly analyze the deal, you will need to obtain concrete information from the seller.

Now that you know the basic financials of the property, it's time to dig deeper. Here are the top three questions that you must always ask about the property:

• What is the upside potential?
• What is the deferred maintenance?
• What is the seller's motivation?

Here's what we didn't cover in this post: Market fundamentals. Investing in the right market is the most important variable for success. Buying in a bad market can result in failure. This is a longer conversation for another day, but it's important to know that the above post assumes that your market is performing well.

Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.

How to Find a Property Management Company for Your Real Estate Investing Team

Real estate investing can be a lucrative business, but managing properties can be a hassle. That's why many investors hire a property management company to help them with the day-to-day operations of their rental properties. However, finding the right company can be a daunting task. Here are two ways to find a property management company for your real estate investing team.

Referrals from Other Investors

One of the best ways to find a property management company is to ask for referrals from other investors. Real estate investing is a tight-knit community, and many investors are more than happy to share their experience with property management companies. Reach out to local real estate investment clubs or associations and ask for recommendations. You can also ask for referrals from real estate agents or brokers who specialize in investment properties.

When asking for a referral, be sure to ask about the company's experience, their fees, and their communication style. It's also a good idea to ask for references from current or past clients. Once you have a few referrals, do your due diligence and research the companies further. Check their reviews online and ask for a copy of their contract to review.

Online Directories

Another way to find a property management company is to use online directories. There are several directories available that specialize in connecting investors with property management companies. These directories allow you to search for companies based on location, services offered, and fees.

Some popular directories include All Property Management, Buildium, and Cozy. These directories typically have a vetting process for the companies listed, so you can be assured that the companies you find are reputable. However, it's still important to do your own research and read reviews before making a final decision.

Conclusion

Finding the right property management company for your real estate investing team can take some time and effort. However, by asking for referrals from other investors and using online directories, you can narrow down your options and find a company that fits your needs. Remember to do your research and ask the right questions before making a final decision. With the right property management team in place, you can focus on growing your real estate portfolio and increasing your profits.

The Importance of Finding Lessons in Life's Challenges

I believe that within any situation, there is a valuable lesson to be learned. It's easy to feel helpless and discouraged when we face difficult or challenging circumstances, but we must remember that there is always something to be gained from these experiences.

Instead of thinking, "Why does this always happen to me?" we should try to identify the lesson and how it can help us and others. It may not always be easy, but it's worth the effort.

Life is short, and we should cherish every moment. It's important to be grateful for what we have and to focus on the journey, not just the destination. We've all been guilty of getting so caught up in our goals and aspirations that we forget to appreciate the present. Have you ever forgotten to enjoy the moment because you were too focused on the future?

Let's make a conscious effort to enjoy life more. Smile, laugh, be present, communicate, give, and love more. Remember that every experience, even the negative ones, has something to teach us. When we embrace these lessons, we can turn them into opportunities for growth and empowerment.

It's also important to take a step back and appreciate the beauty that surrounds us. Life is precious, and we should make the most of it. Let's not get so caught up in our goals and aspirations that we forget to enjoy the present moment. Take breaks from your routine, and try to find joy in the simple things.

In summary, let's strive to learn from every situation, cherish our time, enjoy the journey, embrace the lessons, appreciate the beauty around us, and make the most of every moment we have.