It is my opinion, based on my research and experience, that there truly do not exist secret formulas to apartment building investment success.

To use a hypothetical example lets assume we are examining a seminar teacher who calls himself "Apartment Guy Gus". You see his ad on a late night tv infomercial or you see a video of his on you tube. The opening shot is "Apartment Guy Gus" speeding through his residential development of million dollar homes inside a red convertible Ferrari. Wow.

This is supposed to show how wealthy "Apartment Guy Gus" became by buying apartment buildings all across the country using his proprietary apartment building investment system. Apparently "Apartment Guy Gus" has made so much money using his system that now he offering it to the general public for the incredibly low price of $1,200.00. And then he goes on to explain that he really doesn't need to work anymore because his secret system has made so much money and that he is only offering it to the general public because he feels that he is doing a great public service. And "Apartment Guy Gus" has also discovered the secret to buying apartment buildings with no money down and bad credit.

One of the important financial documents that you will want to request from the seller of your potential apartment building investment are the rent rolls. The rent rolls give you the name, unit number and rent paid for each tenant in the apartment building. Typically the rent rolls will be on an excel file. A close inspection of the current and historical rent rolls can give the careful investor a lot of important information about the property.

I recommend that you carefully read over the rent rolls for the past three years.

You should compare the actual rent rolls to whatever financial information that was given to you by the seller or the seller's realtor. You also want to watch out for issues such as tenant turnover. For example, has the tenant in unit 12 changed three times in the past two years? If you are seeing an unusually high turnover in occupancy then this may indicate that there are problems either in management or maintenance.

Remember, it is going to cost you money every time you have to replace a tenant who moves out. This can have a big impact on your bottom line and profitability.

The analysis of historical rent rolls will also tell you when and if rents were recently increased. This will let you know if you will be able to add additional value to the property by raising rents. Make a careful comparison between the rents being paid and what market rents are being paid in other similar buildings in the same geographic area.

You should also verify, on the current years rent roll that the tenants are actually paying the rent that is recorded on the rent roll. This can be verified by copies of the cashed checks in the seller's bank account. If you find that the seller is reluctant to provide all of the financial information that is necessary for you to perform your due diligence it is usually a sign to give up the deal and look for another one.

You should also be suspicious if the realtor is telling you it's a great property but that the current owner doesn't keep good records. While it may be true that the seller didn't keep good records this should raise a red flag.

If the seller neglected to maintain accurate financial records there is a good chance that he or she didn't keep up with other important areas of property management. This could lead to unforeseen problems in the future.