Commercial Real Estate- How big is too Big when you buy your first Apartment Building

Commercial Real Estate- How big is too Big when you buy your first Apartment Building

by Darrick Scruggs

It is hard to say, it all depends on your circumstances, your current financial situation, your knowledge of investment and a myriad of other items that need to be taken into consideration when it comes to size and or price of an apartment building. Investors, need to set realistic time frames for what they want to accomplish, stop being in a rush, this is not a sprint it is more like a marathon and you do not need to always be first to the finish line to win. Let me clarify that size does not always matter, what matters to me more than size would be the property, location of the building, and the terms of the deal and in the end can I make a profit. I would favor a great location of a distressed building over great building in a bad location, in my opinion if possible you would like to purchase the worst building in the best area.

There is a lot more to it when deciding about the right Apartment building. Even before you get into doing all the necessary homework needed to make this deal a reality you need to access what level of commitment will you be able to provide for the project. I see so many people that are extraordinary at doing the analyzing of the buildings financial, but they forget the most aspect of Real Estate, it is first and foremost a business. Most become enamored with fancy spreadsheets with colorful graphs that shows the “potential of this or that project. Potential will not pay the mortgage, or make a profit for you. The goal for you as an investor in most cases will be to take potential and turn that into reality. I have saying that goes like this, “if come will not make you rich”. Let’s try through developing systems to turn that word “if” and or potential into actual income.

The reason I mentioned all of this about “if come” and “potential’ relates back to the topic of this article how big is too big when you start. As a seasoned investor I try to use the crawl, walk, and then sprint system for beginners. As a child you do not just wake up one morning and start to sprint, you crawl for a while get comfortable, then figure out how to balance yourself and then you start to walk, after that you do not immediately start to run, you probably try to take baby steps, then larger step only after you feel comfortable. Well this is the basis of my success for the past 13 years in real estate, when you do not have a solid foundation that you are building on; you will more than likely tumble and fall. Take baby steps, 15-25 units to get your feet wet, build your knowledge of the business, and learn the ins and outs of owning a multi-family building. Then and only then would I advise you to even think about trying to do a large building, of course there are exceptions to every rule. But if you are interested in learning how to turbo-charge your learning curve and maybe skip the crawling portion of this business and go into an all out sprint right away you need to contact The Power to Be Free.