Apartment Building Investing

These are some of the questions I ask my new real estate investing clients in order to serve them best. I believe all Buyers can benefit from thinking about these.

  1. What is your top goal for investing in Real Estate? Cash flow? Appreciation? Diversification? Retirement? Value Add?
  2. Check your risk tolerance. Are you able and willing to see your asset value and or cash flow drop by 20% without causing you financial hardship? Many investment properties will not provide cash flow for the first year or until stabilized.
  3. Who is the decision maker in your family? Are you actively working with trusted advisors, CPA’s, financial planners? Please name all the other decision makers in your family or entity.
  4. Are you approved with a lender and if so for 1-4 Units or 5+ Units? They require different loan types. You should be working with a reputable local lender who specializes in investment property.
  5. What is your time horizon? 3-5 years? 10-20 years? Will this asset go to your heirs?
  6. How much down payment do you have ready right now? Will this leave you with adequate reserves?
  7. Which locations are you most interested in? I focus on Oakland and San Francisco apartment buildings because there are lots of transactions taking place there. If your geographic location is too small you risk never finding that perfect property. But it helps to be as specific as possible.
  8. Describe the perfect property in as much detail as possible. Style, size, location, parking, unit mix, price, cash flow, everything you can think of.

Buying small and mid sized apartment buildings in well located areas is a fantastic way to build lasting wealth. I have met with and advised dozens of high net worth investors who have made small fortunes simply by purchasing apartment buildings over time and holding them.

I have also met quite a few families who have inherited commercial real estate and received a stepped up cost basis virtually eliminating the estate tax and passing along amazing wealth to their heirs. All of this made possible simply because one savvy family member purchased a nice apartment building many years ago and took care of it.

Buying apartment buildings is fun and hands on. The investor has direct control of the asset and can manipulate it to increase the yield or stand back and allow a professional to take over management. The best things about investing in multi-family property are:

  • Flexibility
  • Tax Savings
  • Creativity
  • Fights Inflation
  • Low Risk
  • Fantastic Cash Flow

If you have ever considered buying a small apartment building or if you already own one, I urge you to call me now and discuss how I can help you increase your cash flow. Call Nick at 415-812-4450.

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