Are you looking to increase your income through an investment?
Buying an apartment building allows you to do exactly this. After all, over 100 million Americans rent living space!
But, make sure you invest your money in this wisely. Read on to learn 5 considerations to make when buying an apartment building.
When making real estate investments, pay attention to the location. Several aspects of the location will determine potential profitability.
Apartment buildings located in cities with little room for expansion will make you more money because you can then charge more for living space. On the other hand, you can also charge more in upscale suburban areas than you can in many other places.
Centrally located buildings tend to attract more people. Tenants want to easily access their work, local stores, and entertainment establishments.
The surrounding neighborhood will also affect what you can charge your tenants for rent. People will not pay as high of prices if everything around them appears run down.
- Structure and Appliances
How old the building itself is matters less than the age of specific structures. An extremely old building can hold up well with newer structures than a newer apartment with big needs.
For instance, a 15-year-old furnace will need replacing soon and cost you thousands of dollars. An HVAC system also only lasts about 15-20 years and costs a fortune to replace. If you love the location, lot, building, and all other aspects of this apartment, then make sure the cost of the building reflects its needs as well.
Look up to the roof as well, as this is the most costly part of the building. Pay attention to the materials and age of this structure to determine when it will need replacement.
Also, consider the shape of the roof. Read about the pros and cons of flat roofs here!
- Property Upkeep
Look around the property. What type of maintenance does it require?
Consider things like the lawn size and landscaping features. Also, pay attention to the parking lot size, as you will need to plow and pave.
Also, watch for features like a playground, pool, and exercise room. On one hand, these features will draw in more people and allow you to charge more for rent. But, decide if you want to put that kind of time and money into your investment for the upkeep of these facilities.
- Your Goals
Commercial investments that work well for one buyer will not ode well for another. It all depends on your investment goals.
Do you want this for a long term rental or a short term flip? If you want it long term, then you may not mind repairs. But, for an investment where you want to attract tenants and then sell an occupied building, you may look for different traits.
- Your Budget
Pay close attention to your budget. You might see potential in a building that you cannot afford due to taxes, repairs, or other variables. Set an investment budget and stick to it so you do not get over your head and lose everything.
Make Buying an Apartment Building Profitable
buying an apartment building should create future profit for you. Taking in all of these considerations will help this happen.
Are you looking to grow your finances in other ways? Find more tips on the business section of our website!