Good, Bad And The Ugly With Apartments

Finding Any Dirt:

1:36: It's worse to have an apartment full of tenants who aren't paying anything and are causing all sorts of problems and have an apartment full of...no one.

2:50: You want to make sure of what they reported to the IRS. If anything seems off there, it probably is.

5:10: You should never rely on a proforma, which is just an estimate and they will always be in the seller's favor.

6:33: Schedule E’s are part of the 1040 IRS form which is where income or loss from rentals, royalties, S-Corps, partnerships, estates, trusts, etc. is reported. Basically not “earned income” but investment income only.

8:32: You want to see their list of capital expenses for at least the last year for two reasons. (1) you need to see how much they're spending and (2) you need to see whether they're correctly capitalizing things.

10:43: Pay attention to utility costs. What tenants would pay and what the landlord would pay.

Contracts & Analyzing Property Actuals:

13:11: Write up 30-30-30 contracts that are in your favor. 30 until the contract is hard, 30 to line up financing and 30 days extra for something that might come up.

16:23: You want to look at the rent roll and get copies of all the leases. Look for rent price, deposit amount, late fees, when the late fee is charged, pets, etc.

19:28: Talking with the property manager is always a good point of contact.

20:50: Ryan has seen a lot of landlords spend their security deposits, so make sure to pull those out from proceeds .

Inspections & Holding Your Emotions:

24:30: You don’t need an inspector to walk through every unit, but maybe 1 for each building.

26:50: Get a 3rd-Party inspection to go over key systems and the units the sellers don’t want you to see.

30:21: If there are red flags, regardless of how much work you’ve put into it, let the property go. The “Well I just spent X money” is going to keep going.

32:12: Include a letter of intent (LOI) before the contract so you clearly dictate what you’re anticipating.

Connect with the Good Stewards:

• Visit Our Website and Subscribe
• Email | Ask@TheGoodStewards.com
• Twitter | @TheGoodStewards
• Instagram | @GoodStewardsPodcast
• Facebook | @GoodStewardsPodcast