Do These Two Things before You Buy Your First Apartment Building
You might be thinking of purchasing an apartment building as a commercial real estate investment. However, if you are new to owning this kind of building, you might make mistakes that could lead to a bad investment or spending more money than you expected. Use the following pointers to help you avoid pitfalls when you buy your first apartment building.
Look Up Current Zoning Information and the Fire Code
When you are looking at apartment buildings to buy, you might start thinking about ways you can renovate a particular building or expand it. You might consider adding more floors or knocking some floors out. However, before you buy an apartment building, it is vital that you look up the fire code and zoning information for the building you are interested in.
The reason you need to do this is that some zones don't permit construction of additional floors or expansion beyond a certain point. The current zoning may prohibit many of the changes you are thinking of making. It is worth a trip to the zoning office to discuss the zone that a building is located in and what that means in terms of your plans. Also be sure to ask about seeking a variance that might allow you to set the zoning aside so you can develop the property as you see fit.
The fire code may also present a problem for you if you want to make changes, as many fire regulations detail the maximum number of people who can live in an apartment building. Find out what you would have to do—and how much it would cost—for you to make your changes compliant with the fire code.
Factor Maintenance and Repair Costs into Your Offer Price
To keep your tenants happy, you will need to stay on top of repairs that need to be done and various maintenance tasks on the property, such as keeping walkways clear. These activities may cost more than you expect, so it is a good idea for you to do some research and make sure that your bid for the building is made with those costs in mind. You might even ask to see current maintenance records to get a better idea of what you might end up spending on a regular basis.
Use all the information above in order to make smart decisions when you buy an apartment building. Work closely with a commercial real estate agent who has some experience in this area; they can help provide you with more suggestions. Look for commercial real estate by Western Realty Group Inc or another company in your area.