"If It Ain't Broke...Fix It...Fast..."

No, it is NOT a typo. In our business of investment real estate, particularly commercial investment real estate, you need to have a method of always working on the properties that you own - or the person in charge of managing then needs to be doing this. Let me emphasize - ALWAYS. Remember the value of your apartment building is directly derived from the Net Operating Income the property produces. The formula is quite simple:

More Income = Higher Value

I have seen sellers leave thousands of dollars on the table when they have sold their properties...and never even knew it. This is especially true for owners that manage properties themselves and have owned them for many, many years.

Some apartment owners start to play things safe over years of ownership. You may have seen my simple example of the old gentleman that sold his 7 unit property for $130,000. After making just a few changes over a period 4 months, the property was easily worth $160,000.

And I am not talking about putting in new windows, siding, carpet, or cabinets. The changes I am referring to are simply getting rents up to market levels and reducing expenses where needed. What happens with many owners is over time they start to play it safe. They get comfortable with the tenants, their vendors, and the overall property management, and they operate with very few problems - in their own minds...

Thus, as human nature goes, owners tend to stop paying attention to their expenses. They stop paying attention to what the market rents are for the apartments. The bottom line is they fall into 'the comfort zone' and let the building run on its own, rather than making the property more profitable.

Be sure that you are not making these two huge mistakes with your apartment property:

1. Not Increasing Rents To Market Rates

Many owners that manage their own properties have a tendency to not raise rents. I have even seen this where a property management company is running the day-to-day operations.

This is the number one mistake I have seen investors make over the years, and like the gentleman in my story, leave tens of thousands on the closing table when he sold...and never even knew it.

2. Not Watching Expenses Closely

Be sure that you are checking expenses closely, and bidding out services on a regular basis. Do not be complacent with your vendors. It is easy - especially with recurring expenses like insurance to stay with your existing agent, and not 'shop around' on at least a yearly basis. Remember, it is good to have a nice working relationship with your vendors, but do not sacrifice profits and property value because of it.

By the way...you might be wondering about the seller in the story I told earlier. How could a seller with NO real motivation to sell, with NO real reason to discount his price leave a whopping $30,000 on the table? It was not broke so he did NOT fix it. Moral: FIX IT! As much as you can.

Do you want to learn more about investing in apartment buildings? Click the link below for my FREE 7-Part Investment e-Course, and I'll also send you my FREE special report and teleseminar access, "How to Buy Apartments and Commercial Real Estate With No Or Low Money Down."

Download it free here: Apartment Investing.

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http://EzineArticles.com/?expert=Darin_Garman

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It's hard to believe that any asset class could top the 76% runup in equities since the stock market bottomed last March, but real estate investment trusts have done just that. Since Mar. 9, 2009, the S&P Global REIT Index has climbed 114%. In the U.S., the 14 REITs in the S&P 500 are up 140%. "A year and a half ago, people were saying that the REIT industry is going to disappear," says Howard Roth, global leader of real estate at Ernst & Young. Now, even after posting such gains, the industry is in recovery mode, says Roth. He points out that most REIT markets around the world remain well below their peaks in 2007 or earlier. "With only a couple of exceptions and against all odds, REITs have survived and are on the way up," according to an E&Y report that Roth co-authored. Although there may be speed bumps ahead -- real estate fundamentals vary widely depending on market and property types -- many REITs have full coffers they can use
"as a cushion and as a war chest," says Roth.

To get diversified REIT exposure, investors can choose from a number of exchange-traded funds. And real estate mutual funds, most of which have big REIT stakes, gained an average 87% in 2009's rally, the second-best showing among all fund categories, according to Morningstar analyst Andrew Gogerty. Much of that performance, as well as any continued rise, he says, can be attributed to a REIT's "ability to gain access to capital and repair (its) balance sheet."

Technorati Tags: multifamily investing, real estate investing

When it comes to inspecting an apartment property before purchase, there is one simple rule that you absolutely must follow, or it could end up costing you thousands of dollars. I will get to this rule in just a moment, but let's take a quick moment to cover WHEN you should get a property professionally inspected.

There are a lot of moving parts when buying an apartment property. Whether or not you get a professional inspection depends a lot on:

A. The condition of the property, and

B. Your experience in the apartment business

That being said, here is WHEN I recommend hiring a professional property inspector:

1. If it is your first purchase and you are new to the apartment business.

2. Likewise if you are moving up to a much larger apartment property, hiring a pro is a good idea.

3. If you are purchasing outside your area, most definitely hire a professional to go over things.

4. Finally, if you are the type of person that will not sleep at night until you get your property inspected, then get it done.

Whether to hire a professional inspector, or you do the inspection yourself, there is one rule you MUST follow during the inspection.

While you are inspecting the property make sure that you look at EVERY unit. Many apartment owners make the mistake of NOT looking at every unit.

Story..

I worked with a group of investors that purchased a 300 unit property. As you can imagine, the inspection would take a long time to complete. As these guys were ripping through the units, probably had about 200 done, they talked about not looking at the other units since all seemed to be in order.

Reluctantly, after much conversation, they decided to go through the other units. The result?

They found 4 units that had flood damage from 4 years ago! The units had not been repaired or rented for over four years. Let's just say that this required quite a bit of work, labor, and of course, money to get things right.

But...What if they would not have gone through those units? They would have had a nasty surprise!!

Make sure you DO go through all of the units during the property inspection on your next purchase. You may spend some extra time, but will be well worth the effort.

Do you want to learn more about investing in apartment buildings? Click the link below for my FREE 7-Part Investment e-Course, and I'll also send you my FREE special report and teleseminar access, "How to Buy Apartments and Commercial Real Estate With No Or Low Money Down."

Download it free here: Apartment Investing.

Article Source:

http://EzineArticles.com/?expert=Darin_Garman

Technorati Tags: apartment investing, multifamily investing

Ok so 3 more posts today that I've dug up - I'm an information JUNKIE on this stuff lately. Give em a browse and let me know what ya reckon. They're just from a few different sites I've been surfing lately that are generally good for information like this...

NYC Menu Girl - Where to Dine, and How to Do It!: Dinner, for the ... Read the rest of this entry

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