March 1, 2004
Buying Apartment Buildings
Q: I would like to get into real estate. Where can I find out how to start buying investment property such as apartment buildings?
–K. Kendall, Via the Internet
A: A significant amount of study is required before you can begin looking for investment property. You must be prepared to make a financial commitment — generally a down payment of 15% to 20% of the cost of the property you seek. Your initial financial outlay will also include at least three months worth of mortgage and maintenance expenses held in reserve.
You’ll also have to familiarize yourself with the process and paperwork involved in obtaining the title of, and closing on, the property, not to mention handling all of the responsibilities of being a landlord. You’ll need to know how to properly evaluate the physical condition of the property you want to purchase, understand the different types of inspections your property must pass, and perhaps even choose someone to manage the property for you.
Check with your local housing authority, local community organizations, or local colleges or universities for classes on these subjects.
There are several good books available on buying apartment buildings. Novice real estate investors can benefit most from Investing in Real Estate, Fourth Edition by Andrew McLean and Gary W. Eldred (John Wiley & Sons; $19.95) or The Complete Guide to Buying and Selling Apartment Buildings by Steve Berges (John Wiley & Sons; $29.95). Even after you’ve read books and taken classes, it’ll take some time to reap the rewards of investing in real estate. It’s not a get rich quick opportunity, it’s a serious commitment.