Purchasing an apartment complex as an investment is a fantastic way to watch an asset single handedly generate thousands, even hundreds of thousands of dollars in a very short amount of time!
A popular investment strategy, especially for new investors, is to purchase a more run down, mismanaged apartment complex at high cap rates. The cap rate, or capitalization rate, is found by dividing the Net Operating Income by the Purchase Price. Properties that are low performing often sell their apartments at a higher cap rate because there is more of a risk associated with them.
These properties are in need of many changes in order to become a commercial property that is working at its maximum potential.
Before you purchase a large commercial apartment complex, you need to get certain information. This information is crucial to your assessment and evaluation of the property.
There are two states you need to understand regarding the property, the state it is in currently, and the state it will be in after you fix all the major problems.
When you first find or are introduced to a property, be sure to ask for the income and expense statements. A lot can...
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