Buy an Apartment Building with No Guru Included

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There are many thousands of savvy investors across the United States who would love to begin investing in apartment buildings but they just don’t have a plan for success. In other words, they don’t have a clear understanding of the necessary skills, knowledge, and mechanics of commercial real estate investing. Unfortunately, there are very few resources available to the first time apartment building buyer that offer clear, concise and effective information that can be followed like a business plan. The market is flooded with gurus and secret formulas but most of these gurus and formulas are ineffective and actually will have a negative impact on the efforts of the first time apartment building investors for reasons that will be explained in the following article.

Many real estate gurus that teach apartment building investment seminars are very successful real estate investors, however, their major flaw as educators lays in the fact that they teach one “system” that has worked for them personally in one or two markets during one small period of time.

Heraclitus, the Greek philosopher, is famous for saying “you can’t step into the same river twice”. I would say that you can’t invest in the same real estate market twice. Recent headlines make it apparent that the real estate market is in constant flux. What the gurus teach in their courses, to return to the river metaphor, is the way that they personally crossed the river and reached their own personal success at one particular time. Unfortunately, when students try to follow the gurus system they find that the market has changed and the system no longer works. This causes frustration and the student concludes that is impossible to succeed in commercial real estate investments and the student eventually quits or goes on to the next guru, hoping that he or she has the answers and the formula that work.

For the first time apartment building investor these secret strategies and proven formulas for apartment building investment success can seem irresistible because they promise that investing in commercial real estate is really an armchair activity that requires very little work and pays back big profits. However, in reality, nothing could be further from the truth. Commercial real estate investing is more difficult and complicated then residential real estate and the beginning investor should first spend as much time as possible learning the subject and studying the market.

Here are some real world tips that I would give to the first time apartment building buyer:

  1. Devour as much commercial real estate investment research, articles, history, methodology and opinions as possible.
  2. Invest in yourself! Find a legitimate commercial real estate course online or at your local community college.
  3. Network. Build a mastermind group of commercial real estate professionals such as commercial real estate brokers, commercial real estate loan professionals, commercial real estate attorneys, commercial real estate appraisers.
  4. Join an apartment building investment club.

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8 Comments

  1. Great tips, Ted! Many of the gurus do lead people to think that they can simply sit at home and manage a portfolio of apartment buildings with very little work. Having a detailed plan and a strong team is essential for succeeding with commercial apartment investments. Well said.

  2. steve jenings on

    Good story, I agree with the comment that many educators talk about their sucess usually in a rising market . I t would be could if they could cover their plans for each type of market, ie; stagnant, rising or falling.

  3. Apartment building investing is a very specialized field. A very concise system is required to make it profitable. A quality property management company may be your largest factor to be profitable.

  4. As an owner of several apartment buildings (for over 25 years), I can tell you that people underestimate the work involved once they buy the building. They have grand ideas of buying cheap and flipping. You know how there is always a long list of things to do around your own house? Multiply by 5 and you have some idea of what it takes to keep a five-unit building in top shape!

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