Do you want to learn how to buy apartment buildings and be independently wealthy like the people you see on the infomercials? Is it really as easy it looks? The answer is no, it is not easy as it looks, but it can be. With proper knowledge and some good old common sense, anyone can be successful in buying apartment buildings.
- Training. Never attempt to buy an apartment building until you have studied and studied hard on the exact process involved in this business. If your heart is not involved in running a time consuming business, then don't even contemplate this type of business. If you are ready to put your heart and soul into this type of business, then study with the best. Join and investment club, hire a guru or find a real estate company to guide you. There is also much information on the Internet that can be had with a click of a mouse to teach you how to buy apartments.
- Commercial Real Estate Apartment Deals. With commercial real estate, the stakes are different. The financing is more difficult and usually always a requirement of 20 to 35% down. Commercial real estate involves five or more apartments, so it is very likely that the price is much higher than in residential real estate. There is a greater chance of loss also. The bank will give credit back on the rental units towards qualifying and allow a 25% vacancy allowance. Most commercial properties are purchased by seasoned investors.
- Residential Real Estate Apartment Deals. With many residential apartment complexes, there are first time home buyers programs available. If the owner intends to occupy the property, it is owner occupied not investment property. One to four units will sell quicker and financing is easier to obtain. Some first time home buyers programs start with 3.5% down and VA loans have zero down to purchase apartment buildings with.
- Contacting Brokers, Banks and Financial Corporations. Let people know you are looking to invest. This can be done several ways and by several methods. Contact every real estate company in your area and announce you are looking to buy apartment buildings. Let them know you will buy from the one who brings the best apartment building deal. When contacting banks and financial corporations, speak to the loss and mitigation department and "butter" them up big time. Make sure that the person you are talking to will want to talk to you again. If she says call me tomorrow, say, "OK." Never bother or demand, always cooperate.
- Searching for all the Facts. Once you have located the perfect deal, search out all the facts concerning the apartment building. Read the net sheet like you would any contract and know that this net sheet can make or break you financially. Research comparable buildings in the area and look at a title report for possible liens on the property.
- The Art of Negotiating. Now that everything is all set up for your offer, make sure you do not offer too little or too much. This is accomplished by knowing the area and the comparable buildings that have sold in the last three months. Be prepared to wait and not run when a counter offer comes and know how to walk if the price is too high.
- Learn How to Finance. Talk to as many lenders, banks and mortgage personnel as you can and then search the Internet for interest rate schedules. Look at the top sites recommended by your search. Investors need to learn the difference between interest rates and APR (annual percentage rate) and how to apply for a loan without PMI (Private Mortgage Insurance). Private Mortgage Insurance helps the bank only in case you default. A loan with less than 20% down must pay PMI. VA requires no PMI and FHA loans have a reduced form of PMI. Being able to have knowledge between an interest only loan for ten years and a 5/1 loan where the payment is fixed for five years and then will be variable for the remainder of the term.