Investors acquiring apartment buildings for income purposes should look at future financial projections over a 3, 5 and 10 year basis.  Conversely, investors thinking about selling their apartment building should consider the same time line.

One of the biggest impacts on value over the next few years will be capital markets.  The good news is currently lending rates are moderate helping owners to maintain value.  However, the future question is inflation and its impact on rates. 

In today’s credit market there is both fact and fiction about market liquidity.  Yes, it is true that many lenders are no longer making multi-family loans, but there are plenty that still are. 

The take away is moderate interest rates with decent liquidity may make the potential of selling now better than in the near future.  Especially if your time line to sell is within the next three years.

In helping investors buy buildings I almost always preview the property first with out  taking my client.  Recently I went and reviewed a six flat near the Western Blue Line stop that seemed to have promise.  It sits on a park and a good street not to mention the building is 48 feet wide.

It was a rather disappointing showing as the property needed way too much work.  Said another way, I can’t imagine that anybody would pay close to $90k per unit for an empty building that needs a heavy rehab. 

At least I l got good laugh out of the deal as the listing agent had the gall to say he had an offer already; probably from a condo converter.

Recently I helped an investor close on an eight unit apartment building near the California Blue Line stop.  Not many sales these days so I thought perhaps you would like to know the basics:

Price:  $720K
Building:  11,000 square feet
Land:  8,000 square feet
7 Units:  2 bed/1 bath
1 Unit:  1 bed/1 bath
Brick Garage:  4 spaces
Outdoor Parking:  3 spaces

Asset Strong Points
Roof: single layer in good shape
Tuck pointing:  not much help needed
Windows:  95% replaced
Plumbing:  newer horizontal copper
Heat:  tenant heated with top notch GFA systems

The building had a value added through out the years; however, most units needed to be updated including the kitchens and baths.  The new owners did many new improvements other than kitchens but needless to say still a very good deal.  I can’t wait to find another.