Buying an apartment building can be more profitable real estate deal. The matter of fact is that apartment owners have been able to enjoy great return on their investments. Nevertheless, it still remains a question whether or not a newbie should start his/her career with investing in apartment building.
Well, it depends upon a number of things. The first is to understand the pros and cons involved in apartment investment. The nature of deal and the newbie’s ability to understand the deal from many aspects is also the factor that has to be taken into consideration. It also depends upon the newbie’s personality and ability to respond to the risk.
Advantages and disadvantages of investing in apartments
We shall talk about pros and cons of apartments as compared to investing in single-family homes. Understanding of both can help a newbie identify the profitable area of investment.
An apartment building is generally regarded as more consistent revenue provider. The basic reason is that there are normally more tenants living under one roof. Thus, there is a very bleak chance for an apartment building to get totally vacant. Single-family homes, on the other side, can remain vacant for quite a time. In that case, the investor or property manager would have to bear the expense of property management without seeing the revenue coming for months.
Furthermore, there is no need of deploying independent systems for every unit in an apartment building. That said, a main system can serve all of the units in a particular building. On the other hand, if you are owner of several single family homes scattered in an area, you will need to install independent systems for each of the houses. That would add much in the cost of installation and maintenance.
There are some downsides of apartments. The first one is related to the cost of any apartment. While you can purchase a single-family home at a price under $50,000, you can manage to buy only a unit of an apartment at this much cost. With this much price, apartment investment sometimes doesn’t remain an option for newbie investors. Furthermore, apartments are very difficult to finance. It’s usually due to bigger down payments and installation fees with higher interest rates. And you might see it as an advantage to have several rooms partitioned under one roof, this very advantage turns into an irritation when you are supposed to make repairs as it disturbs or disrupts the entire system.
Finally, you will find it very difficult to sell an apartment as compared to selling a single-family home. If you are aiming at the business of real estate flipping, buying a home a selling it in a retail market can be more profitable as compared to buying an apartment in order to resell it. The major reason is that a single-family home has a retail market, whereas an apartment cannot be sold in retail price.
Understanding the deal is important
Although it’s a fact that apartment generally give more revenue, it doesn’t necessarily mean that you, as an investor, should always go for the purchase of any apartment. Market value, location and future prospect are the important things to take into consideration. In other words, it is all about the tenants. If you are pretty sure that you can have tenants in all of the units of the apartment, go for the deal.
As a beginner in the real estate industry, you can consider getting help from several programs that are usually meant to provide assistance to the people involved in real estate businesses. One such program is about Real Estate Virtual Tours, which is meant to use technology to give demonstration of the places before making a personal visit.