You should try to locate an active apartment broker in the specific area you wish to invest. If this is your first investment and you plan to manage the investment yourself you should not aquire anything too far away. If your are going to hire a third party manager then you can go further afield, but then you must also do as much due diligence on that decision as the underlying investment.
A good apartment broker should be able to show you the dynamics of how an apartment investment works on one piece of paper. You need to know the CAP rate, GRM, $ per Square Foot, $ per Unit, Unit Mix, Age of building, Actual lease rents and Actual Expenses, with adjustments of NEW tax and insurance that you will pay at the proposed transaction price. Careful evaluation of income and expenses plus building condition is vital.
All of the above should simultaneously be compared with Sales Comparables & Rent Surveys in the specific market.
In any event, you will always want to find a deal that will earm the same or better than fixed income investment alternatives....otherwise why bother. In other words if you can locate an investment with a 8% cash on cash return, this is better than earing 2-4% on a fixed income investment, and to this the positive leverage of today's low rates you really begin to build wealth. If you borrow 70% of the purchase price at say 6% for 10 yrs. fixed (or better) then you get a positve EXTRA 2% spread on that portion of the investment (if you borrowed 70%) and bought an 8 CAP. Keep in mind you will also benefit from favorable tax treatment via 1031 exchanges as you move up the investment ladder. Good Luck.
So the short answer is an experienced reputable broker willing to work with you.
Sep 22, 2010