First Property Check List

[Eddie Werner]

I am looking to purchase a 50-60k apartment near my home. Pending I find the right one where the numbers add up and I can make a small profit, is there anything I am missing from the below check list?

1. Research property and expenses to make sure it turns a profit.
2. Purchase apartment.
3. Write up a lease and start advertising the apartment.
4. Have interested renters provide information for a thorough background check. Inform them of all costs and security deposit.
5. Upon accepting a renter, inform them to change all utilizes to their name.
6. Keep track of all expenses relating to the property.
7. When taxes roll around, claim all profits as extra income.

I know this is basic but I am looking for a step by step guide that I can follow up on and research each step in more detail. For example, is there anything else critical I should do when taxes come around? Any insight here would be greatly appreciated. I would like to purchase an apartment within the next 12 months.

[J Scott]

While it sounds like you have the barebones basics, I would suggest spending some more time reading and talking to other investors to ensure that you are able to fill in the gaps.

I say that because you've mixed some VERY high-level tasks above with some VERY detailed tasks -- for example, your #1 could be broken down into about 1000 bullet points that are all more important than your #5.

Secondly, it sounds like you're not fully appreciating the complexity of some of these tasks. For example, you seem to assume that writing a lease is something you can do yourself (#3), when in-fact, you almost certainly don't want to do this yourself. Likewise with #7 -- clearly, you don't have much experience with how taxes work or how investments are handled with respect to taxes. While there's nothing wrong with not knowing these things (nobody is born with this knowledge), you need to have an appreciation for the fact that these things can be relatively complex.

In general, here's the top 10 items on your to do list if you plan to buy an apartment:

1. Get educated about buying/managing apartments
2. Learn your desired purchase area
3. Build your team (attorney, accountant and RE agent at minimum)
4. Find properties and filter out the potential deals
5. Do your due diligence on those potential deals
6. Make offer(s) and negotiate a contract
7. Do more due diligence and get to the closing table
8. Rehab if necessary
9. Fill vacancies
10. Management and upkeep of the property

Each of these steps can be broken down into potentially hundreds of other steps, and you need to understand each of these steps to be successful.

#1 may take a year or more. #2 may take several months (and can be one concurrently with #1). #3 may take several weeks (and can be done concurrently with #1, #2). #4-6 may take weeks or months. #7 may take a month or two or three. #8-9 may take months. #10 will take as long as you hold the property.

As you can see, this is a long process...go start with #1 by reading everything you can on this site...