Are you about to purchase your first building? If so, congratulations! Real estate is certainly never a dull investment to own. However, be sure to look into these three aspects of the building before you commit.
- Analyze the current occupancy rate. This will give you an idea of the cashflow you can generate as an owner. If the occupancy rate seems low, ask yourself is this is because the building is being mismanaged, or because of other issues such as location, condition, etc.
- Account for near-term major repairs. As the building owner, you’ll be expected to make repairs. Some things, like the roof, systemic problems with the exterior, HVAC system replacement, etc., can require a major capital outlay, so you need to make sure that you’re able to cover these costs when they come up.
- Get ready to be a landlord. It’s difficult to prepare to be a landlord without ever having been one. Tenants expect you to fix things quickly so they can get on with their lives, and sometimes that will mean being available around the clock. If you don’t think you’re ready to be this hands-on, you’ll want to find a property management company that can handle the building maintenance for you. Depending on your priorities, this can be very much worth the management fee.
Have a different question about the building you’re about to buy? At Hales Property Management, we know a thing or two about buildings. Get in touch with us to discuss your options!