Should I buy this apartment investment property?

[Okie1907]

.

 

[348]

You should hire someone to do inspections to CYA.

 

[tRidiot]

Indeed... if you are thinking about dropping coin on an investment property, make SURE you get someone who inspects EV-ER-EE-THEENG and they are working for YOU.

 

[65ny]

What the last two guys said. Its not uncommon for realtors, investors, and inspectors to have friendly relationships. They scratch each others backs more than you'd think. Spending a few hundred bucks on an impartial inspector could save you thousands later.

 

[tRidiot]

Honestly, taking your time and getting specific advice from some of the contractors on this board and even realtors (@CODE_3 comes to mind) would be time well spent. At 25 you could be getting into a great investment that will set the tone for the rest of your life going forward - or you could end up doing self-maintenance every night till after dark and having to hire in outside specialists to fix tons of problems that you didn't know about like wiring, plumbing, HVAC, roof leaks, foundation problems (oy vey!) and other stuff.

Take it seriously and don't let excitement override sound judgement.

 

[_CY_]

So ive been searching and saving for a house for a while and a couple weeks ago I toured a 5 unit apartment. It is in good shape and has passed all inspections done by the seller who hired a 3rd party. I am a young guy (25) and am thinking about going in on it. It is a bit more than I would like to spend but at the same time I guess I dont need a whole house to my self. The property is currently bringing in 3250 a month and that is with one unit it unoccupied. Which would basically be where I would live. There are currently 4 tenants in there now and the seller will actively seek a new tenant until closing if sold. What do yall think?

NO .. that's a horrible idea .. you don't want to be living in the same building as your tenants.

 

[Hawkman]

Honest advice:

Based on the info you've given, I wouldn't invest in this unless you plan on dedicating yourself to being a part-time (if not full-time) landlord (~20 hours/week working on the property, monitoring the local housing market, etc. etc.) or have significant experience in real estate already. Real estate management IS NOT easy money contrary to popular belief. Oftentimes even a smallish property (like the one you have mentioned) can be a full-time job keeping everyone happy and ensuring your tenants pay up. The fact that the price of this apartment is a stretch for you financially, puts me further toward my opinion to not buy. Personally I wouldn't even consider investing in a property until I could pay for it with cash and could do so without putting my finances in jeopardy.

Good luck whatever your decision may be!

 

[bigfug]

Get your own inspection. Get a property management company to handle everything for you, so you can live in the 5th, and the other tenants dont know its yours since they'll only be dealing with the property management company.

 

[dennishoddy]

What the last two guys said. Its not uncommon for realtors, investors, and inspectors to have friendly relationships. They scratch each others backs more than you'd think. Spending a few hundred bucks on an impartial inspector could save you thousands later.

Yes, there is typically an unholy alliance between some real estate folks and inspectors.
Make sure you get a home inspector, and an electrical inspector. If possible hire them from a nearby town.
I'm well versed in electrical code. When we bought ours, the inspector missed a half dozen blatant violations like open receptacles with no covers in the garage, and SO cable running to the water heater from the Circuit breaker box, vs Romex and armored cable coming out of the 4square make up box.
The plumbing inspector was a buddy of the owner. 6 months later we found 1/2 of the faucets outside were leakers. The owner had stuffed paper into the bibs after removing the handle/gaskets.
Find out the history and age of the AC units.

 

[_CY_]

So ive been searching and saving for a house for a while and a couple weeks ago I toured a 5 unit apartment. It is in good shape and has passed all inspections done by the seller who hired a 3rd party. I am a young guy (25) and am thinking about going in on it. It is a bit more than I would like to spend but at the same time I guess I dont need a whole house to my self. The property is currently bringing in 3250 a month and that is with one unit it unoccupied. Which would basically be where I would live. There are currently 4 tenants in there now and the seller will actively seek a new tenant until closing if sold. What do yall think?

$3250 divided by 4 = $812 per unit .. does that incude utilities? separate electric meters? separate or water on common? window AC units with heater? appliances? etc. etc. what's the age of property? ... think in terms of repair cycles like how old is the roof? when is the AC due for replacement? etc. etc. apartments are a maintenance nightmare ... that $812 per unit goes away quick if/when you have to pay for utilties/maintence/property taxes/insurance etc. etc. etc.

what would you do to support debt service if say 1/2 of your units goes empty? can you handle costs of a new roof? new air conditioners?

you may not need the living space now, but in short order that could/will change.
go with single family houses .. much easier to sell/purchase come your turn. much better to invest in 10x houses or whatever.

a typical buyer for a single family will only need about 5% down or less depending upon special programs like first time buyer, etc.
commercial properties are much harder to finance .. typically 25% to 30% participation/down payment on purchase price or appraisal, which ever one is less .. in short it's much harder to find buyers with good enough credit/30% down payment come your turn to sell.

again ... pass on the small apartments but do invest in more houses!