What to Review Before Buying a Mid-size Apartment Building

What to Review Before Buying a Mid-size Apartment Building

Buying an apartment building requires more than reviewing the purchase price and projected rents. At this size, small operational mistakes can have a major impact on NOI, financing, and long-term returns.

Start with the rent roll. Confirm current rents, lease dates, security deposits, concessions, delinquency, move-in dates, and month-to-month tenants. Compare in-place rents to market rents, but be realistic about how quickly rents can be increased. In California, covered properties may be subject to statewide rent caps and just-cause eviction rules under the Tenant Protection Act.

Next, review the operating statements. Do not rely only on seller-provided summaries. Look closely at repairs, utilities, insurance, payroll, landscaping, pest control, management fees, legal costs, and capital expenses. Some properties look profitable only because necessary maintenance has been deferred.

You should also inspect the physical condition of the property. Review roofs, plumbing, electrical systems, windows, stairways, balconies, parking areas, exterior lighting, drainage, laundry rooms, and common areas. For older Los Angeles buildings, also confirm whether local rent stabilization, registration, or inspection programs apply.

Resident communication and building reputation should also be reviewed. A property with poor communication, unresolved repairs, or high turnover may require an operational turnaround after closing.

Before buying, ask for:

• Current rent roll
• Leases and amendments
• Tenant ledgers
• Maintenance history
• Vendor contracts
• Utility bills
• Insurance claims
• Code violation history
• Capital improvement records
• Delinquency report
• Security deposit schedule

A good acquisition review should answer one question: “What will this building actually take to operate correctly after closing?” The best opportunities are not always the cleanest buildings; they are the buildings where the buyer understands the true operational plan. Feel free to reach out to us and we can provide rent comps or an operational review to assist you in making a purchase decision.

If you would like to talk about your management needs please reach out at contact@duopm.com to schedule a consultation.