Are you planning on investing in apartment buildings for the first time? If so, you’re making a smart choice!
Apartment buildings without a doubt continue to be one of the absolute best investments that anyone can make, especially in 2020, when economic uncertainly has shaken the stock market and investors are searching for safe places to put their money.
Even though the United States is currently in a recession, apartment buildings are an excellent asset because people always need a place to live.
Large or small; apartment buildings are always in demand, and if you own a fourplex or a large multi-family property, you’re going to be in the excellent position of capitalizing on that demand for years to come.
Before you get started with investing in apartments, read this article for tips that you can use to find and invest in the right apartment building.
Tip #1 – Choose The Right Location First
If you’ve known someone in the past who was a real estate agent, you may have heard then say the famous catchphrase “location, location, location”. Real estate agents say this because the location of the home or commercial property does matter because where the property is located will affect its resale value and overall desirability.
Location is also important when purchasing apartments because if it’s in a bad location, you may have a difficult time renting available units in that property and long vacancy periods could put a strain on your finances.
To find an apartment building in a great location, it’s best to use the internet to research the area that you want to buy in. You should specifically be looking for a location that’s close to me highways, and public transportation so that people can get to and from work conveniently on a day-by-day basis.
The apartment that you purchase should also be in a walkable location. This means that it should be close to local grocery stores, shops, restaurants, and other things to do in the local area.
Besides purchasing an apartment that’s in a walkable location, you should also look for a building that’s part of a great school district.
Choosing an building that’s located in a great school district is important because you can count on renting to at least one tenant who’s going to have children in school and some parents may be inclined to rent an apartment versus a single-family rental if the apartment is in a great school district.
To research school district information just use Google, or another search engine to look up reviews of that school district which were written by parents who live in that area.
During the process of reviewing the location where an building is located, you should also pay close attention to the latest news and information regarding the location that’s being reported online.
Specifically, you want to be paying close attention to the crime rate in the area and what’s happening economically there as well.
Are local businesses hiring? Or are they leaving town?
Is the area attracting larger businesses and corporations, or are they unfriendly to new development?
These are just a couple of quick questions that you should be asking before you make the final decision to purchase an building in an area that you may be unfamiliar with.
Tip #2 – Decide On The Type Of Apartment Building That You Want To Buy
Once you find a great location to purchase an apartment building, the next thing that you want to do is think about the type of apartment complex that you want to purchase
Since you’ve never purchased an apartment building in the past, you may not be familiar with the fact that there is more than one type of apartment building and that these classes range from Class A to Class D.
Class A Apartment Building – These apartment buildings are typically Luxury Rentals that have been built within the last 10 years, or they may be older. Class A apartment buildings typically contain a variety of amenities including tennis courts, clubhouses, and swimming pools.
Class B Apartment Building – One of the most common types of apartments in the United States today are class B Apartments. These buildings are typically around 20 years old and although they may not have the same amenities as Class A apartments, they are often well-maintained and offer a dedicated laundry room, swimming pool, and in some cases a smaller workout area.
Class C Apartment Buildings – These buildings are most often 30 years old, or older and have fewer amenities than Class A and Class B Apartments. Sadly, besides having little to no amenities, Class C buildings are usually in need of renovation or repair so if you’re thinking about purchasing one, it’s best to have it thoroughly inspected so that you can consider the renovation costs before you take the plunge and buy it
Class D Apartment Buildings – Last of all, but most important, the next class of buildings to consider are course class D apartments. These apartments are also usually older as well. You can expect the average age of a Class D apartments to be around 30 years old or older. Investors who view them for the first time often find that they are in dire need of repairs or renovations while also lacking the amenities that even a Class C apartments have.
Which class of apartment building should you choose? Ultimately the decision is up to you but, from experience, I could tell you that many investors typically choose either Class B or Class C buildings for the first building set they purchase.
Yes, class D apartment buildings may seem ideal because of the price but the reality is that this class of apartment building often comes with lots of up-front renovation and repair costs plus intense Property Management obligations.
Regardless if you purchase a Class A through D apartment building, the most important thing that you should do before you say yes to investing in apartments is to consider your return on investment.
To do this, it’s important to have the apartment building that you plan on purchasing thoroughly inspect it so that you can confirm if it has any deferred maintenance costs or possible renovation issues which can make it difficult to rent out vacant units.
You should also pay close attention to the rent rolls as well to verify how much income that property is generating every month.
Tip #3 – Decide On The Number Of Units That Your Apartment Building Should Have
So far, I’ve given you a lot of food for thought to consider in this article that you can use during the process of getting started with investing in apartment buildings.
Besides considering things like the class of the type of apartment building that you want to purchase, you should also think about how many units you want the apartment building to have.
For example: are you searching for an apartment building that will provide you with income for your retirement, or side income? If so, you may want to stick with purchasing a smaller apartment building that has no more than six units but, if you want to own an apartment building that provides you with substantial income every month, you may want to consider purchasing an apartment building that has up to 20 units or more.
Tip #4 – Where To Find Apartments For Sale
Right now, is without a doubt one of the best times in decades to purchase an apartment building because the current economic recession is forcing many owners across the United States to make tough financial decisions which include selling their apartment buildings.
Over the coming months, there may be a wide variety of apartments coming up for sale across the United States and with mortgage interest rates continuing to drop, now is the right time for investors to finance their first apartment buildings while a fantastic interest rate.
To find buildings, you should start searching online because you may find for sale by owner listings but if want to target a specific area like Miami, Los Angeles, Dallas, or another city, you should hire a Real Estate agent to aid you with your search.
Contact Trier Capital
After reading this article, I hope that you have greater insight into how to purchase your first apartment building in the United States.
If you feel like purchasing an apartments is a lot of work, the reality is that it could be a lot of work, if you intend on doing everything yourself.
What’s the solution to the problem? Instead of sourcing, acquiring, and managing that building yourself. why not partner with me so that my company can do everything for you?
Trier Capital is a private equity firm that makes it easy for you to passively invest in lucrative apartment building syndications.
We do all the hard work to find and acquire ideal properties, and then oversee asset management after purchase, while our investors sit back, relax, and receive tax-advantaged passive cash flow.
To learn more about the services that we can offer you, contact me today by calling (630) 229-2383 or click here to connect with me online.