The Complete Guide to Buying and Selling Apartment Buildings Quotes

“Another good source is the Institute of Real Estate Management (IREM) . Each year it publishes a comprehensive book entitled Income and Expense Analysis: Conventional Apartments (Chicago: IREM/National Realtors Association), which provides data on more than 3,700 apartment buildings in over 150 different major metropolitan areas.”
― Steve Berges, The Complete Guide to Buying and Selling Apartment Buildings

“The One-Minute Assessment in Three Easy Steps 1. Divide gross income by 2; the result is an estimate of NOI. 2. Calculate the cap rate by dividing NOI by the asking price. 3. Determine whether the resulting cap rate is in line with the market.”
― Steve Berges, The Complete Guide to Buying and Selling Apartment Buildings

“Five ratios are required in multifamily property analysis: • The capitalization rate • The cash return on investment • The total return on investment • The debt service coverage ratio • The gross rent multiplier”
― Steve Berges, The Complete Guide to Buying and Selling Apartment Buildings

“Say you have located a 50-unit apartment building that is charging on average $600 per month. Your research indicates the market will bear $640 per month. Using a capitalization rate of 10 percent, a bump in rental rates over a 12-month period of $40 per month would create $240,000 in additional value.”
― Steve Berges, The Complete Guide to Buying and Selling Apartment Buildings

“Poor collection of rents may provide you with an opportunity to create value, but remember: the price you pay for the apartment complex should reflect the value of the property as it is currently operating, not what it would be if all of the rents were being collected. The value is created only after you have acquired the property and made the necessary changes to improve collections.”
― Steve Berges, The Complete Guide to Buying and Selling Apartment Buildings

“Net operating income is derived as follows: Gross income − total operating expenses = net operating income”
― Steve Berges, The Complete Guide to Buying and Selling Apartment Buildings

“Five Essential Components of an Income Statement 1. Operating revenues. 2. Operating expenses. 3. Net operating income. 4. Debt service. 5. Reserve requirements.”
― Steve Berges, The Complete Guide to Buying and Selling Apartment Buildings

“The Complete Guide to Real Estate Finance: How to Analyze Any Single-Family, Multifamily, or Commercial Property (Hoboken, NJ: Wiley, 2004),”
― Steve Berges, The Complete Guide to Buying and Selling Apartment Buildings

“Single-family property appraisals are largely based on comparable sales, while multifamily property valuations are driven primarily by income.”
― Steve Berges, The Complete Guide to Buying and Selling Apartment Buildings

“Six Ways to Locate Properties 1. Real estate brokers. 2. Classified advertisements. 3. Industry-specific real estate publications. 4. Local and national Web sites. 5. Associations and real estate investment clubs. 6. Banks.”
― Steve Berges, The Complete Guide to Buying and Selling Apartment Buildings

“Examples of like-kind exchanges cited by the Money Income Tax Handbook (Sections 26.711-26.715) include the following: • An office building for an apartment building. • A rental building for land on which a rental building is constructed within 180 days. • Business automobile for a business computer. • Real property you own for a real estate lease with a term of 30 years or more. • Used business truck for a new business truck. • Oil leasehold for a ranch. • A remainder interest for a complete ownership interest.”
― Steve Berges, The Complete Guide to Buying and Selling Apartment Buildings

“Among the most important factors to consider when determining your optimum holding period are the tax implications and how they will impact your bottom line.”
― Steve Berges, The Complete Guide to Buying and Selling Apartment Buildings

“There are four crucial factors to consider: 1. The resources available to work with. 2. The size of the property. 3. The age of the property. 4. Your holding period.”
― Steve Berges, The Complete Guide to Buying and Selling Apartment Buildings

“Following is a sample list of some points you will want to include in your business plan. These can all be organized in a very professional manner in a notebook that includes tabs. • Executive summary. Include a one- or two-page summary of your plan. • Mission statement. Include one or two paragraphs that succinctly state your purpose. • Background. Present information about yourself and your experience. • Financial statement. List your assets, liabilities, and net worth. • Site location. Include a list of benefits, maps, and proximity to shopping and schools. • Demographics. Present information about the people living in the area (income, education, etc.). • Competitor analysis. Determine who your competitors are and present average rents and sales comparisons. • Marketing strategy. Define your target market (tenants, buyers, etc.). • Financial analysis. Include historical and pro forma operating statements. • Improvements. Define capital improvements to be made to the property. • Purchase agreement. Include your sales contract with the seller. • Exhibits. Include photographs of the property, tax returns, sample floor plans, and the like.”
― Steve Berges, The Complete Guide to Buying and Selling Apartment Buildings

“Do not let a broker attempt to convince you that the property is worth anything more than a multiple of its existing NOI.”
― Steve Berges, The Complete Guide to Buying and Selling Apartment Buildings

“I prefer looking for properties that are more than 90 percent occupied and that just look a little rough from the outside due to poor management and neglect.”
― Steve Berges, The Complete Guide to Buying and Selling Apartment Buildings

“Depending on the level of coverage your lender requires, you should be able to insure your property for about $100 per unit per year on average.”
― Steve Berges, The Complete Guide to Buying and Selling Apartment Buildings

“The 10 Ways to Create Value 1. Increase rents. 2. Convert a master-metered property to a submetered property. 3. Add vending services including laundry, pay phones, and soft drinks. 4. Offer exclusive rights to cable TV service with revenue sharing. 5. Offer exclusive rights to satellite service with revenue sharing. 6. Provide access to building rooftops for cellular companies. 7. Consolidate two or more apartment complexes to achieve synergies. 8. Convert excess storage space into rentable living area. 9. Install water-saving devices in showers and bathrooms. 10. Protest assessed tax valuations to have them lowered.”
― Steve Berges, The Complete Guide to Buying and Selling Apartment Buildings

“To be truly successful, you must be willing to assume risk.”
― Steve Berges, The Complete Guide to Buying and Selling Apartment Buildings

“Three basic components must be considered when defining your objectives: your entry, postentry, and exit strategies.”
― Steve Berges, The Complete Guide to Buying and Selling Apartment Buildings