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I had some random apartment related questions that were floating around in my head after reading How to Buy and Sell Apartment Buildings, and I'm just curious as to how apartment investors handle these issues.
Here they are:
1. Do you look for or avoid apartments with clubhouses/laundry rooms/pools?
2. How do you determine the difference between a lump of coal and a diamond in the rough? ...I am guessing that what one investor would see as a problem, another would see as an opportunity- and where do you draw the line? (Ex. Foundational issues would be a deal killer, but anything outside of that would be a go.)
3. Would you prefer a class A apartment complex with a low vacancy over a class C with a high vacancy- if the cashflow potential was greater on the class C, but repairs were unknown?
4. How do you really determine repair costs? There is so much upside to riding the economy of scale, but it seems the downside can be just as brutal...if you're off by $200 a door, then it can be a game over pretty quick! How do you tighten up estimates?
5. When verifying the numbers, how do you figure if there is any deferred maintenance?
6. Do you go into a complex and gut all the iffy appliances and AC units, or wait for them to go out and replace them as needed?
Just wondering.
Here they are:
1. Do you look for or avoid apartments with clubhouses/laundry rooms/pools?
2. How do you determine the difference between a lump of coal and a diamond in the rough? ...I am guessing that what one investor would see as a problem, another would see as an opportunity- and where do you draw the line? (Ex. Foundational issues would be a deal killer, but anything outside of that would be a go.)
3. Would you prefer a class A apartment complex with a low vacancy over a class C with a high vacancy- if the cashflow potential was greater on the class C, but repairs were unknown?
4. How do you really determine repair costs? There is so much upside to riding the economy of scale, but it seems the downside can be just as brutal...if you're off by $200 a door, then it can be a game over pretty quick! How do you tighten up estimates?
5. When verifying the numbers, how do you figure if there is any deferred maintenance?
6. Do you go into a complex and gut all the iffy appliances and AC units, or wait for them to go out and replace them as needed?
Just wondering.

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