When assessing an apartment complex, it's crucial to have access to details regarding income, expenses, and debt service. Furthermore, during a tour of the apartment, you should inquire about the following 10 items:
Why is the seller selling?
So, why are people selling their homes? Well, it really depends on the seller. Someone who's doing a 1031 exchange might have a different level of motivation than someone who's just "entertaining offers." And estate sales are different from those of someone who's retiring and moving to Florida. Make sure to ask this question a few times (at least three) because the answer could always change.
How long has it been on the market?
This can give insight into the motivation factor and potentially reveal any issues.
Will the owner do seller financing?
Seller financing can be a valuable option for both parties when negotiating a deal. It allows the seller to finance part or all of the purchase price, enabling the buyer to make payments over time. This option is beneficial for buyers who may not qualify for traditional financing or may have difficulty securing a loan. It can also help sellers sell their property more quickly and potentially receive a higher return on investment.
When considering seller financing, make sure the terms are clear and mutually beneficial. Agree on the interest rate, payment schedule, and other relevant details.
Overall, "seller financing" is a useful tool that can lead to better terms and outcomes for both parties.
What is the screening process for new residents?
Do they take people out of homeless shelters or purchase with parking situations and give them an apartment? Make sure you know what you're getting into beforehand. Do they have rental history, house rules, co-ops, Cincinnati meetup groups, mortgage payment, down payment, income requirements, work history, credit score, criminal background, and sublet policy? Check qualifications.
What is occupancy?
Knowing the number of residents in an apartment building isn't enough. You need to know the effective occupancy, which tells you how many residents are paying.
What is the market rent for an apartment?
What is the rental rate for similar apartments in the area?
What is market occupancy?
The property management company or real estate broker can provide this information.
What type of work is needed on the property?
Take this information with a grain of salt. There will likely be more issues that you discover during due diligence.
When was the last time the AC units were cleaned?
This question is best asked in person. If they don't have an answer, it may indicate that regular maintenance isn't a priority, which means more money may need to be allocated for deferred maintenance.
When did they buy the property and what did they pay?
Ask your broker or co-op reserve fund. This information can tell you what the vendor is thinking in terms of what they will get out of a great deal.