- Finding the right property
- Income properties
- Commercial Real Estate
- Bank Loan
Investing in apartments is similar to investing in houses. An important difference between investing in houses and investing in apartments is that you often have a tenants associations or a apartment building manager to deal with when you are investing in apartments. Tenants associations and apartment building managers can sometimes limit what you are allowed to do in your apartment, the hours you can work, how you can bring material into the building etc. This can make it harder to finish renovations in the apartment quickly and harder to realize the apartments full potential.
A good read before you start investing in apartments is “Apartment Investing: How to Renovate, Furnish & Decorate Your Apartment on a Shoe String Budget” by John Brooks. This book is available through Amazon and will teach you what to look for when you are looking for an investment apartment and how you can maximize the value of your money while renovating.
If you want to invest in apartments you should look for the same type of property that you would look for if you were looking for a house. You should be looking for a property that presents poorly but that can be easily brought to its full potential.
It is generally harder to find under priced apartments than it is to find under priced houses. This is due to the fact that apartments seldom are allowed to fall into as bad a shape as houses sometimes are. Buyers are also more wiling to renovate apartments themselves than they are with houses. This is due to the fact that it feels safer to buy an apartment that needs renovating than a house. There are less hidden surprises in the apartment.
This means that there are less opportunities for flippers in apartments than there are in houses. It is however possible to find good opportunities. This is especially true in up and coming areas where you can buy apartments and raise them to the the standard that the new type of tenants desire. By specializing in a certain up and coming area you can make a lot of money quickly and learn exactly what buyers want to be willing to pay a high price. Once an area starts to mature it will be harder to find new deals. You should therefore always be looking for new up and coming neighborhoods that you can start investing in.
Apartment offer excellent opportunities for people who want to invest in income properties. This is especially true if you invest in apartments and turn them in to Executive rentals. You can read more about investing in Executive rentals here.
If you want to invest in apartments to build a portfolio of income property you will need to calculate each purchase well. You need to look at how much money you can charge in rent each month and weigh that against how much the monthly mortgage payment will be and how much you expect to spend on maintenance each month. Do not forget the buildings maintenance fee. The apartments need to be able pay all costs and provide you with a monthly profit. If not you should refrain from investing in that apartment.
Always do the calculations with several different interest rates to see if the investment remain profitable even if interest rates go up. Interest rates are record low at the moment and it is important that your investment remain profitable at a higher interest rate. Expect interest rates to go up to more normal levels in the coming years.
It is very important that you calculate how much you can pay for an apartment before you make a bid on one. Don’t forget to include renovation costs and a contingency found in your calculations. It is important that you do not exceed the price that the calculation says that you can pay for the apartment. Never get involved in a betting war and always stay disciplined. You are buying the apartment as an investment. If the numbers don’t work, they don’t work.
In many market it can be hard to find apartments that are in an investor friendly price range. In these areas it is usually more prudent and more profitable to invest in houses until your are able to invest in whole apartment buildings rather than individual apartments.