How to Find Off-Market Apartment Deals, Winston Rowe and Associates
It is a great time to buy distressed apartment properties. That is, if you can find them, get them at the right price and effectively manage and lease them.
By: Winston Rowe and Associates
Get to know the attorneys in the distressed market and the lenders with existing loans. Establish relationships with brokers who specialize in multifamily properties who track distressed apartments and have relationships with lenders. Offer to protect their reasonable fee for acquisition opportunities they source for you.
Consider buying notes but be sure to understand the risks of stepping in the lender's shoes. Consider the collateral, the collateral title, the borrowers' intentions, and jurisdiction issues related to the foreclosure process and recent bankruptcy/cram down court decisions. Also consider the time, risks, and costs to get from lender to property owner.
Ability to close:
Provide your best proof of ability to close in writing with offers. Liquid cash in the bank sufficient to close all cash is best. If not, get as close to that as possible. Consider large earnest money deposits—of course with a solid contract and a safe escrow agent. Lenders in short sale, receivership or OREO situations may not respond to offers without proof of ability to close.
Due diligence and underwriting:
To increase occupancy in most cases you should underwrite your lease rates and lease up conservatively. Make sure you understand the sales comps, lease comps, demographics, the job market in the area, the loan status of competing properties and all the costs to bring the property to stabilization. Sometimes when buying notes or when in a competitive bid situation, it pays to do your due diligence prior to making an offer.
Winston Rowe and Associates prepared this article, they are a national due diligence and consulting firm. You can visit them online at https://www.winstonrowe.com
Winston Rowe and Associates