Downsides of Mortgage Assumption for the Buyer of a Multifamily Apartment Complex 21

Disclaimer

“The Secrets Success Factors of Multifamily Landlords— (And How to Avoid The Pitfalls too!).”

Zach Harsh @ Buying Apartment Buildings

The information included in this eBook is for educational purposes only and is not meant to be a substitute for seeking the advice of a professional. The author and publisher have made the best efforts to ensure the information in this book is accurate. However, they make no warranties as to the accuracy or completeness of the contents herein and cannot be held responsible for any errors, omissions, or dated material.

This book contains strategies, effective suggestions, methods, and other advice that, regardless of the author’s own results and experience, may not produce the same results (or any results) for you. The author makes absolutely no guarantee, expressed or implied, that by following the advice, you will get the same or any results, as several factors and variables come into play regarding any given situation.

Liability Disclaimer:

By reading this book, you assume all risks associated with using the advice, data, and suggestions given below, with a full understanding that you, solely, are responsible for anything that may occur as a result of putting this information into action in any way, and regardless of your interpretation of the advice.

1 What You Will Find in this Book

Disclaimer i

Liability Disclaimer: i

Introduction 1

Reasons Multifamily Real Estate Investments Go Sour 2

Poorly Managed Multifamily Investment Syndications 3

Funding Blues 3

Poor Legal and Compliant Management 3

Poor or Non-Existent Marketing 4

Miscommunication 4

Landlord Burnout 5

Uncouth Tenants 5

Late and Irregular Payments from Tenants 5

Struggling in Juggling Repairs and Expenses 6

Issues with 3rd Party Property Managements 6

Massive Capital Expenses with Poor Spend Management 7

Why and How to Sell Multifamily Real Estate in Silence? 8

Reasons to Remain Secretive in Selling Multifamily Complexes 9

Sell in Secret to Ensure Existing Tenants Don’t Vacate in Haste 9

Sell in Secret to Ensure Onsite Management Remains Smooth 9

Sell in Secret to Prevent a Deal Is Spoiled Before the Final Seal 10

Maintaining Selling Secrecy 11

Don’t Talk to Regular Realtors 11

Keep Tenants Happy with Maintaining the Level of Service 11

Why Not Go to Brokers to Sell Multifamily Assets 12

It’s Not the Forte of Most Real Estate Brokers 12

Start an Exhaustive Cycle of Showing After Showing 12

An Alternative: Private Investors with Established Networks 13

They Are Direct Stakeholders 13

They Don’t Waste Time 13

No Commissions Involved 14

Handling Multifamily Real Estate Investors 14

Keep It As Transparent As Possible 14

Keep Hammering “Shared Risks, Shared Profits” Philosophy Into Investors 15

Make the Most of 1031 Exchange 15

Leverage Cost Segregation Planning 15

Pricing of Multifamily Properties 16

Current Financial Statements 16

Vacancy Rate 17

Physical Vacancy Rate 17

Economic Vacancy Rate 17

Expense Ratio 17

The Need for Major Capital Expenditures 18

Comparison with Neighboring Properties 18

Mortgage Assumptions and Commercial Loans 19

Things to Consider When Opting for Mortgage Assumption 19

Assumable Mortgage 19

Upsides of Mortgage Assumption for the Seller of a Multifamily Apartment Complex 20

Upsides of Mortgage Assumption for the Buyer of a Multifamily Apartment Complex 20

Downsides of Mortgage Assumption for the Seller of a Multifamily Apartment Complex 20

Downsides of Mortgage Assumption for the Buyer of a Multifamily Apartment Complex 21

Handling Commercial Loans without Hefty Prepayment Penalties 21

Seller-Financing Benefits for Both Sides of the Deal 22

Seller-Financing Benefits for the Seller 22

Seller-Financing Benefits for the Buyer 23

Why Someone Doesn’t Want to Manage an Inherited Multifamily Property 24

Messy Heir Dealing and Stemming Disputes 24

Parents Had a Bad Experience of Handling the Property 25

What Happens When Someone Has to Manage an Inherited Multifamily Property Against their

Will? 25

Conclusion 26

Introduction

There is little doubt that a multifamily property venture is a great option for all those investors who don’t want to put up with the volatility and uncertainty of the stock market. Even among the real estate investment options, multifamily properties often make more sense than the majority of other choices.

Firstly, it is easier to acquire loans for multifamily property investment than single housing units.

Banks and financial institutes remain lenient with loans for multifamily complexes and apartments because they know about the cash flow capabilities of those real estate assets and see them more as a business than just real estate.

On the other hand, investing in multifamily ventures can see your portfolio grow in a faster time because it is always easier to build and run a 10-unit property complex than ten individual properties. Also, when you have a multifamily complex to run, you can usually afford to hire 3rd party property management service and take a significant amount of work off your plate.

A multifamily property deal can’t get any better if you inherit that asset. Inheriting a multifamily property means you can get around all the initial financing hassle while reaping all the investment benefits.

Despite all those upsides, there are many people who just want to get rid of their multifamily assets.

From the property management overwork to dealing with difficult tenants and in quick need of cash, there are many reasons a multifamily landlord may want to surrender that prized title.

I am writing this book for all those tired landlords looking for a way out. The book will discuss different hidden and rarely discussed aspects of multifamily property management as a landlord— what to do and what to avoid. The discussion will help you successfully steer your multifamily investment ship out of troubled waters.

But if you have already made up your mind to sell your assets with no room for reconsideration, the later sections of the book will help you with how you can make those transactions while creating win-win scenarios.

Now let’s start our discussion that will come in useful for multifamily landlords for managing and selling their properties without incurring losses or losing peace of mind.

Reasons Multifamily Real Estate

Investments Go Sour

Like any investment venture, multifamily real estate investments can go south. Since multifamily properties entail hefty capital investments and extensive management, it gets difficult to take care of them and keep them profitable without getting into full investor mode.

Here, I am going to outline some of the common reasons behind multifamily real estate going sour.

Poorly Managed Multifamily Investment

Syndications

Many people who want to invest in real estate take the route of multifamily syndications. These syndications entail more than one passive investor pooling capital together to purchase a multifamily asset. The idea is to get equity in the real estate asset and the cash flow it eventually generates.

However, it is easier said than done managing multifamily syndication. There are many mistakes that lead to poor multifamily syndication.

Funding Blues

It is one thing to formulate a syndicate and another thing entirely to get loan approval for your investments. Any deal will be unable to see the light of day if you, as a syndicate, are unable to get the required fund within the deal deadline. Here, a better option is to start arranging funds even before initiating the real estate purchase process.

Poor Legal and Compliant Management

If you are spearheading a multifamily investment syndicate, you have the responsibility of ensuring everything is compliant and within respective legal boundaries. You need to ensure that all your paperwork is in line with SEC guidelines. Moreover, you have to uphold the sanctity of your fiduciary responsibility and relationship (established by the law) with other investors.

A multifamily syndicate not taking care of legalities will remain entangled in compliance troubles.

This poor legal performance will inevitably affect the profitability of the property. Working with an

SEC attorney with considerable experience in syndication management can help you iron out all the legal and compliance kinks before they start hurting your multifamily venture.

Poor or Non-Existent Marketing

If you are still in the building phase of a syndicate, you need to effectively promote it for roping in the right type and number of investors. However, many rookie multifamily investors don’t understand the importance of promotion. You need to show off your “brand” as a syndicate to attract more investors who fit what you’re looking for and what they need in an investment. With poor or no marketing at all, you might not be able to create a thriving syndicate.

Miscommunication

Poor communication among the members of the syndicate is also a leading reason why a multifamily venture doesn’t make it. There is a need to establish a transparent working environment where every member must be aware of what’s going on. This transparency is a prerequisite to building a long-lasting rapport among the syndicate members, which goes a long way in making a multifamily investment venture a success.

Landlord Burnout

Landlord burnout is another reason why multifamily investment don’t see a successful end. The term

“landlord burnout” defines a state where the owner(s) of a multifamily real estate has gotten fed up, annoyed, and exhausted with the property management for any number of reasons.

These are some of the most common reasons why a landlord burns out and starts looking to get rid of their multifamily real estate:

Uncouth Tenants

Well-mannered and civilized tenants are a blessing for property owners. On the other hand, ill- mannered and uncivilized tenants are the bane of the landlord’s peace of mind. The issue of bad tenants becomes a double whammy when it is a multifamily apartment complex. A bad tenant also annoys the other tenants of the building and can lead to inter-tenant disputes and higher tenant turnover. So, a landlord does not just have to deal with the shenanigans of that bad tenant but also have to listen to and address the grievances of the other tenants who are equally disturbed and annoyed by that one tenant or sometimes many tenants.

Late and Irregular Payments from Tenants

Late and irregular payments from tenants are another reason that exhausts a landlord running a multifamily apartment complex. The non-payment, delayed payments, and reschedules make it difficult for a landlord to maintain the required cash flow to take care of maintenance and repairs and pay the other investors in a timely manner.

Struggling in Juggling Repairs and Expenses

Even if tenants’ payments are on time, it is not easy to maintain the monthly finances of a multifamily property when the landlord is employed full-time somewhere else. The never-ending repairs and accompanying expenses make landlords lose all the interest in their investment.

Any good multifamily complex requires good cashflow management to plan and manage the actual planned maintenance, as well as leaving enough for unplanned repairs and expenses. Therefore, cashflow that has been negatively impacted by tenants’ non-payments contributes to a declining apartment complex.

Issues with 3rd Party Property Management

One solution to get around the above-discussed burnouts is to outsource the property management to third-party experts. However, it also rarely pans out in favor of the landlord. One of the most recurring issues landlords have with a 3rd party property management company is they don’t take care of the building, like a first-hand owner. They are often taking care of a number of landlords and properties, so having your apartment complex as the number 1 priority can be compromised if you don’t choose the right management company to partner with.

Most of them have a passive and reactive approach to repairs and maintenance. This means they only act when a repair becomes inevitable or when tenants have complained about something several times. Find a great management company, and you can work with them to take a more proactive approach to property management.

Landlords also struggle to make their partnership with property management companies a success because many companies cut corners to fix repairs and maintain the building. This partnership failure eventually results in overall poor-quality maintenance and lower tenant satisfaction.

Massive Capital Expenses with Poor Spend

Management

It is important to understand that a landlord running a multifamily apartment complex is often not a seasoned expense management professional. A large developed real estate complex entails massive capital expenditures. From HVAC to plumbing and flooring, many things in the property need very diligent routine maintenance and then lifecycle replacements. Not keeping track of these things compounded with increased construction/maintenance costs only blows up the overall expenses and cash outflow. This messed-up spend management forces many landlords to consider removing the overwhelming weight of the property from their shoulders.

Why and How to Sell Multifamily Real

Estate in Silence?

Trying to sell your property under the radar— this is one of the secrets to selling a multifamily apartment complex with success for the price you want without spoiling your relationship with tenants and other stakeholders.

I would like to give one important clarification here that selling in secrecy doesn’t mean you have to take any unlawful measures. Similarly, it is not a tip for people trying to sell a multifamily apartment complex without getting all the investors on board.

So, why am I advocating for selling in secrecy from your tenants?

Keep reading, and we will reveal this in the next section.

Reasons to Remain Secretive in Selling

Multifamily Complexes

Sell in Secret to Ensure Existing Tenants Don’t Vacate in

Haste

It has been observed that when tenants get to know that the sale of their multifamily apartment complex is on the cards, they try to leave it as soon as possible. There can be various reasons why a

8 tenant makes this decision. For instance, many of them are just apprehensive of the change of management. They fear that their comfort zone will be tarnished during the transition.

Many tenants also act quickly to leave a multifamily apartment complex that has gone on the market because they assume that the new landlord will increase the rents in their first owner move.

By keeping the sale deal a secret, you can ensure that a great migration doesn’t start from your property, impacting the cashflow and its selling prospects in the market.

Sell in Secret to Ensure Onsite Management Remains

Smooth

When people taking care of the maintenance and regular repairs come to know that the property has gone up for sale, they can get laidback with their work. They start considering themselves answerable to the new owner only and ignore the instructions of the existing landlord. This lack of authority often results in poor onsite management that dissatisfies tenants but also stains the property’s overall presentation just before the property changes hands.

You are under no obligation to notify property management contractors regarding any potential sales deal. No such clause is part of the contract you sign with them. So, keep the deal confidential from them without worrying about any legal implications to ensure they remain diligent with their work.

Sell in Secret to Prevent a Deal From Spoiling Before the

Final Seal

Suppose you start finding the investor parties and meeting potential buyers without keeping it under the radar. From tenants to management officials, every stakeholder will find out about your decision within a couple of days. As mentioned earlier, this “unannounced” announcement will become an unofficial cut-off date for tenants to move.

In short, you will experience an uptick in the vacancy rate even before any deal moves to the final stages.

Moreover, the sale’s news could make property management officials ’switch off’ from their roles and duties, resulting in poor property management.

A moving truck parked outside a building for a leaving tenant and poorly managed building won’t make any good impression on a potential buyer visiting the site for a general assessment.

Maintaining Selling Secrecy

Keeping the sale deal of a multifamily apartment complex is not an easy job. You need to ensure that the least number of people know about your sale plan. Besides that, you need to take care of these two things.

Don’t Talk to Regular Realtors

If you have already talked to a group of realtors about selling your multifamily apartment complex, then good luck with maintaining any secrecy. Buying and selling news and updates circulate with the speed of light in those extended circles of realtor networks. Once a local realtor comes to know about your intention, it is just a matter of time before your tenants and maintenance guys find out that you are selling the complex.

Keep Tenants Happy with Maintaining the Level of Service

While you are planning and materializing your sale plan, don’t be neglectful of the level of service you have been maintaining for the tenants. It has been observed that owners get somewhat forgetful of the outstanding maintenance and tenant complaints. For many tenants, this becomes a sign that the owner of their apartment complex is going to be replaced in the coming weeks/ months.

Why Not Go to Brokers to Sell Multifamily

Assets?

If you have made your mind to sell your multifamily apartment complex via a broker, I would advise you to go through this section before making the final decision.

It’s Not the Forte of Most Real Estate Brokers

Most real estate brokers are used to work on homes, condos, apartments, vacant land, etc. A multifamily apartment complex is something out of their scope. They may agree to help you sell it.

However, you won’t like it seeing them struggling to put together a successful deal.

Start an Exhaustive Cycle of Showing After Showing

Brokers love to take potential sellers on property showings. As a buyer, it will get tiresome after the first couple of rounds. Tenants also don’t like it when a group of people barge into the complex and roam around with their overcritical stares every other day.

An Alternative: Private Investors with

Established Networks

Going to private investors is a better alternative to sell your multifamily property. Various reasons make private investors the best option to sell a multifamily apartment complex.

They Are Direct Stakeholders

Unlike brokers, a private investor boasting a strong network of like-minded individuals is the direct stakeholder. They are buyers, not buying agents. With brokers, you can always expect a deal to crumple for gazillions of reasons. However, the direct involvement of investors in the transaction makes any sale deal more fail-safe.

They Don’t Waste Time

Entertaining potential buyers and sellers defines the entire work of a real estate broker. Therefore, they are not mindful of the duration of a meeting or a property showing. On the other hand, a private investor has entirely different work ethics. They don’t like wasting time and expect the same from others.

No Commissions Involved

As mentioned earlier, private investors are direct buyers. So, you don’t have to pay them anything.

Selling a multifamily apartment complex to a private investor pans out pretty similar to a retail transaction where a buyer and seller deal with each other without any middleman. This can easily save you as the seller tens of thousands of dollars.

Handling Multifamily Real Estate Investors

Multifamily real estate properties are seldom owned by a single investor. Usually, the syndication of multiple investors steers the ship of a multifamily real estate venture. The sponsor of the syndication has the most challenging role to play since they need to manage the expectations of all the investors. Here I am outlining the areas you need to take care of if you are at the helm of a multifamily syndicate as a sponsor/syndicator.

Keep It As Transparent As Possible

Investors trust a syndicator with their lifetime investments. To reciprocate that trust, you need to make sure that all the legal and financial details and developments regarding the property are accessible to all the investing stakeholders. Every investor should have easy access to rent rolls, general ledger, bids, invoices, T12s, capital expenditure reports, etc. This accessibility for transparency will successfully hold the syndication together for the duration of the investment.

Keep Hammering “Shared Risks, Shared Profits”

Philosophy Into Investors

Things don’t always go as planned. A sudden repair cost or a spike in tenant turnover can affect the monthly/ quarterly returns you have promised the investors. Similarly, a good occupancy rate with minimal overheads might result in better-than-expected returns. You need to keep reminding investors that things will remain shared no matter how they pan out. These reminders will keep investors’ expectations in check and help them understand the uneven dynamics of multifamily apartment complex ventures.

Make the Most of 1031 Exchange

As a syndicator, you need to fully understand the benefits of 1031 exchange for your multifamily apartment project and how to execute it. The use of the 1031 exchange can help you improve the total returns with a significant capital gain tax deferral when you want to exchange your existing multifamily property with another similar asset. This point of transaction will also provide you a window to cash out investors who want to pull out of the investment.

Leverage Cost Segregation Planning

Cost Segregation is an effective strategic tax planning tool that enables multifamily syndicators to improve depreciation deductions and defer federal and state income taxes to increase the cash flow for the property. You need to work closely with tax experts to use cost segregation planning for its full benefits. A syndicator offsetting revenue dips through cost segregation stimulus can better handle its investors.

Pricing of Multifamily Properties

If you want to sell it for a good price and without waiting for too long, you must know how a multifamily apartment complex is priced. In this section, I will share with you the list of criteria that most private investors use to assess a multifamily property and put a price tag on it.

Current Financial Statements

The latest financial statements always come into play when you want to sell your multifamily apartment. A potential buyer will certainly ask you for these two financial documents: rent rolls and

T12s. The rent roll is a simple document or register that shows the total income of the landlord from the entire multifamily complex.

Meanwhile, T12 is short for “Trailing Twelve-Month Financials”. It is a general understanding that when a potential buyer asks you for the “latest T12,” you will have to furnish all the apartment complex-related finances for the last 12 months. T12 reports usually break down the income and expense into sub-categories for the trailing 12 months.

These statements and documents help buyers and investors gauge the “financial viability” of the apartment complex. Finding this enables them to make a suitable and sound bid for the property.

Vacancy Rate

The vacancy rate is another factor that plays an important role in pricing a multifamily apartment complex. There are two types of vacancies to consider when it is a commercial real estate property like a multifamily apartment complex.

Physical Vacancy Rate

Physical vacancy rate represents the percentage of all available apartment units that are not currently leased.

Economic Vacancy Rate

The economic vacancy is the variance between gross potential rent or the total possible rent at

100% occupancy, and the actual rental income. This includes tenants not paying rent, periods between turnovers, rental incentives such as offering new tenants first month free rent and giving free rent to property managers or maintenance people.

By finding out the physical and economic vacancy, a potential buyer can draw the future occupancy and vacancy outlook of the property and price it accordingly.

Expense Ratio

Expense ratio is a definitive way to find out the profitability of a real estate property. It is a ratio between the operating cost to maintain the property and the income generated by it. The lower the expense ratio of a multifamily apartment complex, the higher will be its profitability quotient, which means a better buying quote from investors. Although too low of an expense ratio is a red flag to buyers causing more in-depth scrutiny into financial statements. Most buyers in most markets expect around a 50% expense ratio.

The Need for Major Capital Expenditures

A potential buyer of a multifamily apartment complex is mostly a seasoned investor. When they decide to invest in a particular apartment complex, they need to factor in all the relevant long-term implications. Therefore, they always assess a property for its needs for major capital expenditures.

For instance, they will factor in the operating life of the HVAC, plumbing system, and roofing of the complex. If they are in for near-future replacements, they will quote their price accordingly.

Moreover, they will also ask about the remodelling status of the complex. The potential price of a multifamily apartment complex is directly proportional to the number of its remodelled units.

Comparison with Neighboring Properties

Potential sellers will also compare a multifamily property with neighboring properties to set its price.

Investors mostly show up after completing their groundwork that particularly includes finding out how similar real estate properties in similar neighborhoods are faring.

Mortgage Assumptions and Commercial

Loans

If you want to buy or sell a multifamily apartment complex, you must be mindful of these two crucial things: mortgage assumptions, commercial loans.

Things to Consider When Opting for a Mortgage

Assumption

I’m going to outline the upsides and downsides of mortgage assumption for both buyers and sellers of a multifamily apartment complex. Having the information about both sides of the coin will help you consider the right things when opting for mortgage assumption.

But Before that, you should know what an assumable mortgage is.

Assumable Mortgage

An assumable mortgage is a real estate loan that is transferrable from the original borrower to the next owner. In other words, a buyer of the property assumes or takes over the current mortgage and continues with the same debt piece rather than applying for a new loan. y. In most cases, the interest rate and terms remain the same.

Upsides of a Mortgage Assumption for the Seller of a

Multifamily Apartment Complex

Makes the Apartment More Marketable: Suppose you bought a multifamily apartment complex on an assumable mortgage at a 4% interest rate. Then, you plan to sell it five years later when interest rates have risen to 6%. The lower interest rate (2% lower) will become a selling point due to the cost savings for many potential buyers.

In short, if interest rates have gone up in the following years after your apartment purchase, you can ask for a higher price based on its low-interest mortgage.

Downsides of Mortgage Assumption for the Seller of a

Multifamily Apartment Complex

Due to the current economic environment and historic low interest rates, most debt pieces in place have a higher interest rate than what can be acquired with a new loan. Many experts expect this historic low interest rate to stay for the foreseeable future due to all the macro economic factors currently in play.

Downsides of Mortgage Assumption for the Buyer of a

Multifamily Apartment Complex

A person buying a multifamily apartment complex doesn’t just assume the outstanding loan on the property. They also have to take into account the rise of real estate value that has happened since the seller acquired the property. To pay off that difference, the buyer needs to have a large chunk of

19 down payment ready. Otherwise, they need to go for the second mortgage. Also, the paperwork is often times more difficult and time consuming for an assumption than it would be to qualify for a new loan.

Handling Commercial Loans without Hefty

Prepayment Penalties

It is important to match up your debt piece with your business plan. Meaning that if you plan to sell in 5 years you should structure your loan with a 5-year balloon. However, things change, and any number of circumstances could change that timeline resulting in it making sense to sell early.

Suppose your multifamily investment offers better-than-expected returns and you get in a position to pay off your commercial loan before the end of the term. All commercial loans have a prepayment penalty, typically the earlier in the term the more expensive the penalty is. The hefty fine may significantly reduce your IRR (Internal Rate of Return). Don’t forget to look at your prepayment penalty before selling early in your loan term.

Seller-Financing Benefits for Both Sides of

the Deal

When you buy a multifamily apartment complex and also sign a mortgage directly with the seller instead of applying for the loan through a bank or any other financial institute, you essentially get into a seller-financing agreement. Seller-financing is mostly a win-win situation for buyers and sellers.

Let’s quickly go through the benefits of a seller-financing benefit for both sides of the deal.

Seller-Financing Benefits for the Seller

● If a contract is created under the guidance of legal and tax experts, this real-estate

agreement can save sellers a significant amount of capital gain tax.

● A seller financing deal can close more quickly than regular deals because the buyer doesn’t

have to go through time-consuming checks of a financial institution to become eligible for

the purchase.

● They can sell the real estate on an “as-is” basis without incurring the cost of extensive

repairs and touch-ups, which is a part of a regular lender-brokered deal with lender and

insurance repair requirements that need to be met.

● Sellers don’t have to pay any commission to agents and firms for arranging the deal.

Seller-Financing Benefits for the Buyer

● Buyers can manage to acquire a property in less time when they sign a seller-financed

agreement. In a multifamily investment context, this quicker turnaround helps them to start

generating cash flow from their asset right away.

● A seller-financing agreement has room for flexible and negotiable payment schedules since

you sign a contract with an individual or a group of individuals instead of a financial

institute. You can get creative so the seller can hit their number and the buyer can make the

terms work.

● Just like sellers, buyers also save the cost of paying hefty commissions, appraisal charges,

surveys, etc., to third-party entities.

Why Someone Doesn’t Want to Manage

an Inherited Multifamily Property

It is one thing to draw together investors and make multifamily syndication; it is an entirely different thing to receive the property through an inheritance. It has been observed people who inherit a multifamily apartment complex often want to get rid of it. In this last section of the book, I will share some common reasons why inherited multifamily property remains an unwanted asset to many.

Messy Disputes Between Heirs

This is the most common issue that an inherited multifamily apartment complex faces. Commonly there is more than one heir, and they are not all able to agree on how to handle the property and pay-outs.. A property with owners who have dissimilar approaches can’t turn it into a successful investment endeavor.

Parents Had a Bad Experience of Handling the Property

As mentioned earlier, syndicating multifamily property is not an easy endeavor. Most people who are not career investors or real estate experts usually fail to manage a multifamily apartment complex. Children of all those successful and not-so-successful multifamily apartment complex owners have seen the sleepless nights, bad evictions, and management headaches. They have learned a valuable lesson from their parent’s experience by the time they inherit the property, and many want to get rid of it ASAP.

What Happens When Someone Has to

Manage an Inherited Multifamily Property

Against their Will?

After what we have discussed in the book, it would be very easy to imagine how someone managing a multifamily apartment against their will can pan out. To sum it up, when someone has to manage a multifamily complex when they don’t really want to, they just fail to take care of its multifaceted

23 operational nature. Dealing with a group of tenants, taking care of the maintenance of the building, and addressing the concerns and reservations of investors— all of it becomes too much to handle for those who are not even interested in undertaking a multifamily apartment in the first place.

Conclusion

There is no doubt that a multifamily apartment complex can prove to be a great investment avenue.

However, it is only possible if the owner of the property takes a proactive approach and focus on every little aspect of this real estate investment. They should know how to ensure optimal occupancy rate and keep maintenance expenses in check. They must know the art of keeping investors happy and when and how to use tax leniencies to maximize cash flow.

Without these things at their disposal, it won’t be a good idea to keep owning a multifamily complex that exhibits more liabilities than benefits. In such cases, it is better to sell your multifamily apartment complex to seasoned investors at a good price and use your money that suits your sensibilities and competencies.

If you would like to know more, please contact us at Buying Apartment Buildings via phone at:

1-888-799-7915 or email [email protected]