Key Factors I Consider When Hunting for the Perfect Apartment Deals

1. Can it survive a 2008 economic crisis situation with at least a 5% margin of safety in the break even point after the downturn?

2. Over 100 units which will allow at least 2 full time staff onsite

3. $45,000 tenant household income at minimum within the block

4. Market has been around a long time, not up and coming. Job diversity in the surrounding area

5. Would you still be proud to own the asset if it didn’t make money for an extended period of time?

6. Has some type of mote advantage

7. How many “need to’s” are there in the deal in order for it to work

   1. Need to raise rents $200, need interest rates to stay the same, need job growth to continue, need there not to be an oil bust, need to make the profit in year two because of the financing loan term, etc.

   2. Instead, invest in deals that have very few or no “need to’s.” Ideally the deal already works as is.

8. Don’t rely on one tenant. I’ve seen deals only work if the single Airbnb company succeeds. The deal was 100+ units.

9. Avoid C class deals that have already been heavily rehabbed. You’re basically buying a yield play at that point. Might as well buy an A or B class yield play that has less chance of unexpected maintenance risk.

10. Being near elementary, middle or high schools can be a bonus because there can be less turnover cost as people stay at the school for many years. Student housing for colleges is totally different and I don’t do them.

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