Does anyone know how to evaluate the value of an apartment complex…This is one of the main things that throws me off because I dont want to pay too much for the property…I know the more the seller carries the better for me…Also can I get a loan for the property if I dont have the greatest credit or no money…Please Help!!!
An apartment complex may not be the best place for you to start. Bad credit, no money, no basic understanding of valuation does not sound like a winning formula. Small residential properties may be a better place for you to start. You can make some money, build your credit, and gain valuable knowledge, before millions of dollars are on the line that would destroy you for years to come if things go bad. This ofcourse is just my .02.
The jury is still out as to whether Danny is “Great” or not (just kidding Danny!) but he is giving you great advice here…an apartment complex is NOT a good starting place for a neophyte! Actually, as you learn the business, you will see that yourself! Commercial RE is its own beast and fraught with all kinds of landmines – especially for the inexperienced!
A better start would be a duplex or a triplex…
Keith
To accurately evaluate a property you really need to look at the income the property is generating and expenses. The usual pitfall is not accurately estimating expenses and just relying on what the seller is telling.
Once you have a handle on those numbers then calculate the net operating income. Then to come up with a maximum offering price:
NOI/Cap rate = max. price
You can get a loan if you don’t have good credit. Most lenders look at the income generated by the property. However, the rate you get might not be too great because of your poor credit.
I wouldn’t let poor credit deter you. But if you don’t have any money and inexperienced, then I would hold off on an apartment complex.
Regards,
Patti
The others are right, but I would take it one step further. There is no place to start if you don’t have money, credit, or knowledge. Start with the knowledge, fix your credit, work hard and get some money and THEN think about investing. Starting ANY business requires a lot of work and at least some money and credit. That is true whether it is a SFH or a 100 unit apartment complex.
Good Luck,
Mike
Thanks everybody!!! I really appreciate the info and advice…Thanks again…
IF you really want to start in real estate and start with apts and commercial ?? I may be able to help
Yes I really want to start in apts and commercial…If you can be of any assistance I would greatly appreciate it…I know the basics when it comes to apts and commerical…Just need that extra push!
deramussmith
If i were you I would definetly educate myself on this subject so you won’t get burned. I recently read a great book on evaluating investment properties called “What Every Real Estate Investor Needs to Know About Cash Flow…And 36 Other Key FInancial Measures” by Frank Gallinelli. I am basically new to real estate investing and this book made me feel a lot more comfortable weeding the “good” deals from the “bad” deals or even how to make a deal more favorable by changing certain variables.
Just to give you a synopsis of the book most people use only 1 or 2 (i.e cap rate, ROI)measures to determine if a deal is “good” or “bad”. When in reality they should use many more in conjunction with one another. For example some people say the cap rate is x percent, this is a great deal when in reality they should be performing many other financial calculations that might bring something to light.