What are you really buying when you buy an apartment building?

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If you are investor and are looking to purchase a building, what are you really buying? You’re really buying an “income stream”. After all, you want cash flow right? And you want that cash flow or income stream to grow as you own the building. The bricks and mortar and wood are important but the income stream is where it’s at.

Now a building’s income stream can be impacted by several factors; age, location, condition, how it’s managed, and rent control.

More specifically, what you want to do as an investor is grow your net spendable cash flow. That is the cash you keep after you pay expenses, any capital expenditures, debt service or loan payments, and any income tax due on the remaining cash flow.

You can do this by keeping expenses low, raising rents to market value whenever possible, being vigilant on collecting rents and late fees, and using a good CPA, to make sure you take all of your write offs and depreciation.

I like to sell buildings that are low maintenance, easy to manage, with rents that are 20% to 30% under market. By keeping expenses in check, raising rents, and normal tenant turnover, a so so building year 1 can to a dynamite cash cow by year 3 or 4.

Look, there are a lot of buildings out there to choose from. You need a skilled guide to help analyze the numbers and make recommendations. I have help a ton of investors just like you buy multi-family properties. Call me today for a confidential discussion of your situation. There is no obligation and I am happy to share my experience and insights with you.