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How to Purchase an Apartment Complex

by Guest on Mar 3, 2012 Real Estate 1758 Views

Apartment complexes are purchased or sold mainly for the purpose of business gains. Apartment complexes are money making machines, when maintained properly would render constant income.Appartment purchase is a good investment. He should know to inspect the condition of the building and also the legal documents which are required towards the proof, for the ownership and the genuinity of the property. There is a lot of forgeries based on duplicate documents are on the run.

Valuation of the Complex:
Always it is better to look for the apartments through a well established service provider. All investors mainly would be interested in just being an investor. An investor could not be doing the job of a manager. A good regular income generating investment could easily pay the management. The appointed manager could provide a rich variety of options in buying a complex.

Do a little bit of research on the complex that is to be purchased.

The value of the complex is mainly depending on its location. Do a thorough investigation on the prevailing market price of that particular area. For this purpose the investor could appoint an individual or approach a professional service provider.

If the investor deciding to do the inspection job on his own he should first investigate the condition of the complex thoroughly along with the documents.

There should be an investigation made to find the genuinity of the documents also. Carry out the inspection on all aspects. For example if there is a centralized Air condition has been installed, then check for the working condition.

Check for the electrical installation, water supplying system, Security systems etc. Check for the attached properties such as parking area, if any.

Find out the number occupancy, which is required for the assessment of the value of the property. Talk to the occupants about the services provided and how service providers are paid.

Income calculation:
Do a study on the amount of rental collected against the prevailing market price.

If the rental collected is more than the prevailing rate, then after the purchase the rental rate cannot be increased.

If the collected rental is too less than the prevailing rate then there may be some defects involved in the complex.

The current rental rate is much important because that is included in the working cost of the building.

Check the monthly income statement to verify the operating cost and gross income.

Find out the number of units in the complex and arrange to do a thorough inspection of all the units.

The number vacancies and the condition of each unit are important in calculating the operating cost. Check for the expenses like income tax, service tax, insurance payment etc.,

Purchase and Maintenance:
Find out the details about how the complex is maintained. That is how is the rent is collected, how is the Air condition plant is maintained , who is maintaining the garden, how is the services like drinking water supply, electricity supply, security services etc are provided and costs involved. Finally the investor could sign the agreement for purchasing the complex with the help of a legal adviser.

Article source: http://www.appraisalarticles.com/Real-Estate/2885-How-to-Purchase-an-Apartment-Complex.html