1. Do Your Homework

You can’t do too much due diligence when evaluating a community before acquiring it. As the buyer, you need to know a property is poised to deliver the returns it and its investors seek. Or, if the community isn’t in shape to deliver those returns, you have to know what steps are needed to position the property to do so.

At Sweetwater Capital, our brokers working with buyers perform internal market studies and review all the comps in the submarket, both for monthly rents and investment sales. We walk every unit when we do on-site visits.

The quality of nearby schools, area retail centers and entertainment options, and the health of the job market are all factors that come under close scrutiny.

 

2. Secure Options for Debt

When obtaining debt financing for an acquisition, it pays to have options. Sweetwater Capital’s expertise in this field is crucial. Our mortgage brokerage team has relationships with several different lenders: local, regional and national banks as well as life insurance companies. We don’t have one simple dedicated lender source. We put our best resources in competition to secure the best loan for our clients. See our loan process and closed loans.

 

3. Establish Your Deal Breakers

Identifying the factors that would cause you to walk away from an apartment community is critical when evaluating it for purchase. For many owners, factors such as local schools and job market conditions are typical deal breakers. Our brokers are knowledgeable in factors that could make or break your returns if you don’t budget for them properly.

 

4. Be Conservative in Underwriting

Being cautious and pragmatic in projections of a potential acquisition’s revenue growth and returns is always a good idea. For example, buyers sometimes don’t sufficiently fund their capital expenditure (capex) reserves. You want to know that regardless of what happens in the real estate industry or in politics, you will be in good shape, regardless of what happens on the world stage.

 

5. Don’t Skimp on Property Management

Another typical mistake buyers make is hiring a third-party property management firm on the cheap.

Going for the lowest-cost property management firm can be shortsighted. An ineffective manager can negatively impact a community’s operations, harming operating fundamentals, revenue, and returns.

Sweetwater Property Management’s boutique-style management allows us to expand on the industry standards by customizing your needs to maximize the profitability of your time and protect the value of your investment. Our team consistently maintains high occupancy rates while minimizing rental losses to reach the maximum NOI. Check Us Out: sweetwaterpm.com