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Thinking Big When It Comes To Property Investment

Many property managers find that going from running a single family residence to a whole apartment complex isn’t as difficult as they might think.

We’ve written in the past about investment properties, but usually we’ve discussed owning a single family residence, or perhaps a condominium complex. Many real estate investors are doing this, and, when done correctly, provide them with some nice positive cash flow.

But what about those who may be considering a bigger investment? Say, an apartment complex or other building that can generate income as well? Is it really that much harder to purchase real estate such as this, compared to investing in single family homes?

What does it take to buy an apartment building?

We’ll focus on apartment buildings for this example as they are pretty straight forward compared to mixed-use buildings. Apartments are used (with some exception in urban areas) strictly for residential occupancy with a fixed income that may rise or fall based on factors that include rental amounts, maintenance, and occupancy rate.

As opposed to a home purchase, the above factors are typically what lenders focus on when qualifying an investor for an apartment purchase. Good credit and a strong personal financial statement will go a long way, but mostly, your lender wants to know one thing…Is this a good investment worthy of lending money for?

Prior to applying for a loan of this type, you will have to know (and have it in writing in a financial statement), the numbers on the apartment building you plan to purchase. Current rents and income, occupancy rate, and expenses are all taken into consideration. You will also need the building’s operating income statements for the previous two years, the year-to-date operating income statement, and the monthly breakdown of income for the previous 12 months. In some cases, lenders require an occupancy rate of at least 85% before they will consider granting you a loan.

Are you thinking about “going big” with your property investments?

Montemayor & Associates can provide you with all of the information you need to know about making a commercial real estate investment. We’ll guide you through the process, and give you the tools you need to make a solid decision as to whether this is the right path for your financial future. Contact us at either of the numbers listed at the top of this page, or by using the Quick Response form below.

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