Real Estate Investing Basics

I Bought an 80-Unit Apartment Complex in a New Market—Here’s What I Learned

Expertise: Commercial Real Estate, Personal Finance, Real Estate Marketing, Business Management, Landlording & Rental Properties, Real Estate Investing Basics, Personal Development, Real Estate News & Commentary, Mortgages & Creative Financing
233 Articles Written
real estate investment, rental, housing

My company’s latest acquisition was an 80-unit apartment complex.

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As I walk you through this property, I’m going to go over five lessons I learned from buying this real estate investment.

5 Key Takeaways From Buying Multifamily Real Estate

1. Knowing the Market

This is the first apartment purchase I’ve ever made outside of the city where I live. To get to know the market, I stayed in Airbnbs in this neighborhood to really understand the locals.

I wanted to get a feel for the types of tenants that would be renting from our property. I also wanted to coordinate with local property management companies.

2. Speaking with Property Managers

Once we identified this property, I spoke with property managers about rent pricing. I needed to figure out where the rents for this property were at that time and where they could potentially be if certain renovations were made.

With insight from the property management company, we were able to reverse engineer the purchase price by considering the rents and the renovation costs associated with achieving those rent prices.

Related: How to Buy a Small Multifamily Property: A Step-by-Step Case Study

3. Consider Self-Managing

We initially tried out third-party management of this property, but it didn’t work out. Their quality of work wasn’t up to our standards, and there was a lack of transparency and timeliness.

Fortunately, with this being an 80-unit complex, you get the economies of scale being able to have two people on site. So we decided to part ways and self-manage.

4. Direct to Owner

This property purchase reiterated our stance that going direct to the owner to purchase will remain our go-to method. Right now, trying to find properties that are listed through a broker or a Realtor is just too competitive. We’d rather control our own destiny by going directly to the owner.

5. Be Persistent

It took six touches to get in contact with the actual decision maker of this property. And then, it took multiple follow-ups and months to convert them from being uninterested in selling to interested in selling. So practice persistence!

Those were the biggest lessons I learned through some failures and successes with this multifamily property. Hopefully you can benefit from some of these takeaways!

hard-money-lenders

Do you have any follow-up questions for me about this property? 

Ask away in the comment section below!

 

Sterling is an multifamily investor specializing in value-add apartments in Indianapolis and other Midwestern markets. With just under a decade of experience in the real estate industry, Sterling w...
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    Ashley Pimsner Rental Property Investor from Saint Charles, IL
    Replied over 1 year ago
    Nice job Sterling. I especially liked how you made the deal happen by going directly to the owner and not giving up. See you at the Midwest Summit in Chicago.
    Sterling White Rental Property Investor from Indianapolis, IN
    Replied over 1 year ago
    Thanks for the kind words. See you at the event!
    Adam W.
    Replied over 1 year ago
    How did you manage to find information for the owner of the property WITHOUT using any type of real estate agent or broker? So this property was never on the market in the first place? You just thought it would be a good investment based on analysis? Also congrats!
    Adam W.
    Replied over 1 year ago
    How did you manage to find information for the owner of the property WITHOUT using any type of real estate agent or broker? So this property was never on the market in the first place? You just thought it would be a good investment based on analysis? Also congrats!
    Sterling White Rental Property Investor from Indianapolis, IN
    Replied over 1 year ago
    All information is public record. Property was not on the market and yes after analysis it was determined to be a great deal.
    Roger Kuo
    Replied over 1 year ago
    Great Job on this deal. I have a question – If the property was not on the market, how do you determine if it can be had for a great deal? Did you just contact the owner with an offer (what you were willing to pay to make it a great deal)?
    Sterling White Rental Property Investor from Indianapolis, IN
    Replied over 1 year ago
    Correct. Contacted with what we were willing to pay based upon our underwriting assumptions.
    Sterling White Rental Property Investor from Indianapolis, IN
    Replied over 1 year ago
    Correct. Contacted with what we were willing to pay based upon our underwriting assumptions.
    Osvaldo Ray Orozco
    Replied over 1 year ago
    Thanks for posting. Will be investing out of state for 1st time and will be incorporating your advice. Congrats on landing that deal.
    Damien Hart Investor from Atlanta, Georgia
    Replied over 1 year ago
    GREAT job sterling. I am apartment investor myself and we do self management as well. I utilize handymen and VA to do a lot of my heavy lifting…would love to discuss with you more on this and other related topics to apartments. Congrats again!!!
    Sterling White Rental Property Investor from Indianapolis, IN
    Replied over 1 year ago
    Awesome. Shoot me a DM and we can go from there.
    Niketa Dixon New to Real Estate from Chicago, IL
    Replied over 1 year ago
    Awesome Sterling! I look forward to making deals like these in the near future! Thanks for the tips!