If a apartment buildind is free and clear is it more expensive to maintain?

In Buying Property - Asked by Ronnye L. - Jan 22, 2012
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Answer(s)

RJ D.
Lender/Mortgage Broker
New York, NY

Not at all, I'm actually a little confused by the question. I don't understand how it is possible to for a free and clear building to be more expensive to maintain, I'm guessing you have a valid concern, i would like to discuss further. Please call or email me.

Jan 23, 2012
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zee p.
Property/Asset Manager
Brandon, FL

It depends on how you manage the maintenance for the operating expenses accounts! which you minimize what it is not need it, you will conserve energy, example painting, changing windows, roof, garage doors, utilities and so forth etc...
Since you are in control of the apartment and its finances try to save in everything pertaining the apartment builing! zee@stoneycreekventures.biz

Jan 23, 2012
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RJ D.
Lender/Mortgage Broker
New York, NY

Not at all, I'm actually a little confused by the question. I don't understand how it is possible to for a free and clear building to be more expensive to maintain, I'm guessing you have a valid concern, i would like to discuss further. Please call or email me.

Jan 23, 2012
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Andre E. M.
Broker/Agent
Lakewood, CA

I depends, does the apartment have deferred maintenance issues? If not, and the over all condition, that is the building is sound structually; has working plumbing in good/great condition (as water pressure; clear / clean sewage drains); a good sound roof; foundation, etc. you may find yourself not having too much to maintain same other than said property taxes and common ground expenses. What you need to do is get a good home inspector; contractor and roofer to go over same again (of course this will be at your expsense of if you have trust worthy friends in the field they could do same). You may also want to consider getting a "roof certification" if the roof is near the end of it's life, this way if the roof leaks immedialty there after (during the terms of the "roof certification", it can be upto 2 years or more depending if the seller is willing to pay for one (however you too can while in escrow), then the roofing company will come out and fix same. Just be sure you are thorough on your inspections of said property and do try to be sure you get positive "cash flow" out of it if you are purchasing same. So overall the answer to your questions would be it depends on condition.

Jan 24, 2012
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Rick L.
Broker/Agent
Cincinnati, OH

No. You might pay more in taxes based on your schedule E. If it's free and clear you don't have the interest expense to write off. Also, if you've owned it for quite some time you may have very little depreciation expense left to use on your tax return. There should be no differece to maintain but there can be a significant difference in your net return, or profit.

Jan 24, 2012
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Nadina C.
Broker/Agent
Phoenix, AZ

Depends on what point it became "free and clear". Buyer paid all cash for a newish property? Buyer paying cash for an older property? Owner paid off mortgage?
Also depends on age of building, how the building has been taken care of and, here in Arizona, whether it is heated/cooled by centralized "chillers" (not desirable) or the units are individually heated/cooled. A chiller breakdown is expensive and parts and competent technicians are not always easy to come by.
It also depends on the building's classification: A - luxury or C-- down at the heels and marginal tenants. Some tenants may be harder on properties going forward than others; some properties may have more luxury amenities to break down than others.
If you are paying cash, be sure that the previous owner has collected adequate security deposits. Just before a sale some owners or property management companies will load up the tenant roster in order to show a low vacancy but the tenant quality will be questionable and one of the incentives to rent might be no or very little security deposit.

Jan 31, 2012
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