Apartment Complex Sale
When going to buy an apartment complex you will undoubtedly have some questions rushing through your head. One of those questions maybe what to actually ask the listing agent before you sign on the dotted line. Here are some good questions to ask that will get the ball rolling.Some important things to ask about are:
- Why is the apartment complex being sold?
- Has the current owner owned the apartment building very long? How long?
- How long has it been since the mechanical units have been updated? Repaired? Serviced?
(cont'd from above)
- Can you provide the annual tax declaration of rental income (Schedule E's) for the past 2 years?
- If not, what about a current list of renters and an income expense statement?
When you receive the Schedule E's or income expense statements you can ask more questions. If you feel that something isn't kosher by the agent's responses then it should raise a red flag.
Some of those questions are:
- What is the age of the units?
- How many types of units are there? (efficiency, 1 bedroom, 2 bedroom, etc)
- How many of each type are there?
- What is the vacancy factor of other complexes in the area?
- How many units are rented? vacant? being repaired?
- How much do other comparable units rent for in the area?
- What is the supply like for other comparable units in the area?
- How much does the current owner owe on the complex?
- Is the loan able to be assumed?
- Will the seller carry another note if needed?
- Has there been any maintenance that has been deferred?
- If yes, how much do you estimate it to cost for them to be completed?
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