On this episode of The Route, Abe drives an hour and a half north to Lake Park, Florida to walk a 56 unit apartment complex listed at $7 million by one of the largest commercial brokerages in the country. One vacancy, every unit remodeled, and a seller open to an offer. On paper it is exactly what anyone learning how to buy an apartment complex is told to look for. We passed. Here is what we checked before the drive, what we found on site, and why the answer was no.
How to buy an apartment complex starts with what the broker tells you
Before anyone gets in the car, Abe asks the listing broker one question: how open is the seller to an offer? The answer came back that the seller will meet the market.
That phrase is worth learning. When a broker says it, the asking price sits above where the seller expects to close, and there is room for a serious buyer to negotiate. It does not make a property a deal. It makes it worth the drive.
The second early signal was occupancy. One empty unit out of 56 means people want to live there. It could be the size of the apartments, the community, or the price for the area. We did not know which yet, and that is what a site visit is for.
Underwrite the deal before you visit the property
Nothing gets a site visit at Price Capital Group until it has gone through our cap calculator. Jason and Abe built the numbers by hand for years. Dustin, the resident Excel expert, turned that work into a tool the whole team can run in a few minutes.
At the asking price this property works out to about $125,000 per unit. Running the numbers first means the visit confirms or kills a figure we already have. You are not standing in a parking lot trying to decide what a building is worth. You are checking whether what you see matches what you calculated.
We use the same process on every asset class. On The Route EP 4 we ran it on three warehouses in Fort Myers.
Multifamily due diligence on site: the town comes before the building
Lake Park was quiet. Not rural, but not busy. Houses sat spaced out, there were few people on the street, and the small downtown strip had roughly half of its storefronts closed. That is the first read on whether a town is growing or stalling, and no rent roll will give it to you.
The units matched the listing. Most had new floors, air conditioners and appliances, and the property manager could not name one that had not been remodeled. We walk every property the way we walk the buildings we already manage, with the same eye we use on our monthly rental property inspection checklist.
One parking space per unit: the problem the listing leaves out
Then we walked the lot. One space per unit, in a community built entirely of two bedroom apartments. A second car has nowhere to go. Neither does a guest.
In practice that turns into tenants parking in each other's spaces, cars lined along the street, and a steady stream of complaints for whoever manages the property. Friction like that shows up later as turnover. It never appears in an offering memorandum, and it is exactly why anyone buying an apartment building should never skip the walk. The Route EP 1 is the same lesson on a commercial property that looked like a deal until we got there.
Why a fully remodeled building can be the wrong value add deal
A stabilized property with remodeled units and rents close to market sounds like the goal. For a value add buyer it is the opposite. The previous owner already did the work and already pushed the rents, and our market evaluation showed very little room above where they sit today.
The tenants are there because the area is affordable compared with West Palm Beach and the larger cities nearby. That is a real reason for low vacancy. It is also a ceiling. When there is nothing left to add, the seller has captured the upside and is asking you to pay for it.
Location over numbers, and why we passed
Every property we manage sits a few minutes from our office in Margate. Lake Park is an hour and a half away, which changes the cost and the quality of management even with a local property manager ready to help. If the same building sat in Coral Springs, Coconut Creek or Pompano Beach, this would have been a different conversation.
There is always doubt when you pass. Nobody holds a crystal ball, and Lake Park could become the next growth story. What you can do is decide on the evidence in front of you and then watch what happens. In this case the listing emails kept arriving with price cuts, week after week. That is as close to confirmation as this business gets. It is the same rule Jason took from ten years of watching Ben Mallah: go see it yourself before you decide.