Lessons Learned From Buying an Apartment Building
There are a lot of things to know and a lot of lessons to learn when you are going into commercial real estate for the first time. These kinds of lessons can be painful to learn the old-fashioned way, through experience, so here is a list of some of the first lessons a new owner will likely learn. Hopefully, this can prepare you ahead of time and help you avoid learning them the hard way.
Work with Others
Don’t try and do this on your own the first time. There are a lot of people who are there to help and work with you, so there isn’t any reason that you should be trying to do the whole project on your own. Consider investing in commercial real estate with a partner rather than by yourself, this can halve the workload and double the experience that you are bringing to the situation. Talk to other investors, both locally and further away. A lot of investors will be willing to share their ideas and experience with you if you are willing to reach out or buy lunch. These people have done it before, and know the pitfalls and successful methods. Be willing to delegate. You have a team of employees for a reason, so be sure that you are letting them do their job.
Be Willing to Wait
Big deals will take a long time; it’s just in their nature. You need to be able to wait patiently for a deal to come to its natural conclusion. There are a lot of things that will delay a commercial real estate deal, be it weather, contract conditions or repairs, and you need to be able to take all of these delays in stride.
Underwriting and Inspecting
A full inspection can cost a lot of money, and there may still be things that the inspectors missed or that you can’t foresee. Be sure to inspect thoroughly, but don’t go overboard trying to catch everything. Be willing to accept damage costs and underwrite conservatively to handle the new costs and trust your numbers.
Prepare to Work
You need to be prepared to work. An apartment building Is going to be a lot of work no matter how much experience you have or how well you use your team. If you are expecting an easy deal and a piece of cake you will have a rough time, but if you are prepared for a heavy workload you will do fine handling your new deal.