The Complete Guide to Buying and Selling Apartment Buildings

STEVE BERGER is a real estate investment professional with over twenty-five years of expe-rience. As principal of Symphony Homes, he is an active investor specializing in creating value through various real estate mechanisms, including single-family houses, multifamily apartment complexes, and the development and construction of single-family and condominium housing communities. He holds an MBA in finance and marketing from Rice University. His other books include The Complete Guide to Real Estate Finance for Investment Properties and The Complete Guide to Flipping Properties, both from Wiley.

Chapter 1 Introduction to Multifamily Ownership 1

Introduction 1

Holistic Approach 2

Background 4

Market Outlook 6

Regional Trends 9

Chapter 2 Advantages of Multifamily Ownership 13

Time and Efficiency 14

Market Liquidity 15

Transaction Costs 16

Concentration of Units 17

Management and Labor Considerations 17

Tax and Record Keeping Considerations 18

Divestiture of Property 18

Chapter 3 Bridging the Gap 21

Strategies 22

Leverage—The OPM Principle 23

Clearly Defined Objectives 24

Maslow’s Hierarchy of Needs 27

Conquering Your Fears 29

Chapter 4 The Value-Play Strategy 35

Buy and Hold versus Buy and Sell 36

Ten Ways to Create Value 39

Diamonds in the Rough 47

How to Tell a Diamond from a Lump of Coal 61

Chapter 5 Establishing Your Niche and Locating Properties 69

Establishing Your Niche 70

Availability of Resources 70

Property Size 71

Property Age 74

Holding Period 79

Chapter 6 Six Ways to Locate Properties 85

Real Estate Brokers 86

Classified Advertisements 87

Industry-Specific Real Estate Publications 88

Local and National Web Sites 88

Associations and Real Estate Investment Clubs 89

Banks 89

Chapter 7 Financial Analysis 91

Valuation—How Much is That Property Really Worth? 92

Two Crucial Principles That Saved Me $345,000 93

Valuation Methodologies 95

Financial Statements 102

Five Key Ratios You Must Know 117

The One-Minute Assessment 124

How to Read Between the Lines 125

Chapter 8 Case Study Analysis 129

Case Study 1: 52 Units in Flint—My Way or the Highway 129

Case Study 2: 12 Units in Saginaw—Below-Market Rents 142

Case Study 3: 16 Units in Beaumont—A Banker’s REO 151

Case Study 4: 98 Units in Houston—Creating Synergism through Consolidation 162

Chapter 9 Negotiation Strategies and the Due Diligence Process 175

Five Cardinal Rules of Successful Negotiation 176

The Due Diligence Process 185

Chapter 10 Financing Your Acquisition 191

Traditional Financing Alternatives 192

Secondary Financing Alternatives 203

Additional Financing Considerations 206

Chapter 11 Closing the Deal 215

Closing Fundamentals 216

Closing Credits Can Add Up 219

Chapter 12 Managing Your Property 223

Hiring a Professional Property Management Firm 224

Your Role as a Strategic Manager 227

Expect the Unexpected 228

Chapter 13 Four Effective Exit Strategies 233

Outright Sale 234

Refinancing 235

Equity Partnership 245

Exchange of Properties 248

Combining Methods 249

Chapter 14 Five Keys to Your Success 255

Understanding Risk 256

Overcoming Fear of Failure 259

Accepting Responsibility 261

Willingness to Persevere 264

Defining Your Sense of Purpose 267

Appendix A: WWW.THEVALUEPLAY.COM 273

Appendix B: WWW.SYMPHONY-HOMES.COM 275

Glossary 277

Index 297