5 – Understanding Apartment Buildings Listings: A Guide to Avoiding Common Pitfalls
In this episode of Get Real Wealthy Season 4, Quentin D’Souza talks about five things to watch out for on real estate listings for apartment buildings and the need for due diligence.
First, Quentin suggests that you should be cautious when a listing states that a building or roof has recently replaced an AC. The term “recently” can be ambiguous and should be verified with a specific date to ensure the property’s true condition. Secondly, he suggests that you should be aware of listings that advertise potential rents. These potential rents may not align with the current net operating income and can affect financing options. He suggests carefully evaluating the current net operating income and comparing it to the potential rent to ensure that you are not overpaying for the property.
Thirdly, Quentin adds that you should look at listings that describe a property as located in an “up-and-coming neighborhood” more closely. Such neighborhoods may have a high crime rate or be undergoing major changes, which can affect the tenant profile and the property’s overall value. He recommends visiting the neighborhood, talking to the local residents, and gathering as much information as possible about the area. Fourthly, Quentin says you should be aware of listings describing a building as a “century building” or “historical building.” Such buildings may be subject to stricter regulations and have to go through a Heritage Committee, which can make them more expensive to make changes to. So, you need to consider if you are willing to take on the added expenses and regulations that come with owning a century or historical building.
Lastly, Quentin suggests that you should be cautious of listings that advertise “guaranteed rent.” This may mean that the tenants are on social assistance, which can make it difficult to turn over the property and make it challenging to increase the rental income. He suggests carefully evaluating the risks and benefits of such property before making an offer. As a bonus tip, Quentin adds that you should also pay attention to the location of the property and its surroundings when reviewing the listings. Be aware of properties located near gas stations, former dry cleaners, or in industrial areas. A quick Google search and checking the Street View can give you a good idea of what’s around the building.
In conclusion, Quentin suggests that you should pay close attention to the details in real estate listings, do proper due diligence, and keep in mind the potential red flags. By doing so, they can make informed decisions and avoid potential pitfalls in the process of buying an apartment building.
Important Links and Resources
About the Author Quentin DSouza
Quentin D’Souza is the Chief Education Officer of the Durham Real Estate Investor Club. Author of The Action Taker's Real Estate Investing Planner, The Property Management Toolbox: A How-To Guide for Ontario Real Estate Investors and Landlords, The Filling Vacancies Toolbox: A Step-By-Step Guide for Ontario Real Estate Investors and Landlords for Renting Out Residential Real Estate, and The Ultimate Wealth Strategy: Your Complete Guide to Buying, Fixing, Refinancing, and Renting Real Estate.
