Is buying an apartment complex still a good investment in 2020? The answer to this question is yes!
Even though 2020 has been a tumultuous year in terms of coronavirus, job losses, the economy, and riots, the reality is that multi-family properties, including apartment complexes, still continue to remain one of the best investments that any investor can make.
In this article, we’ll break down several reasons why apartment investing is still what we consider to be a great investment for 2020 and, we will provide you with several tips that you can use to find the right multi-family property.
Reasons Why Buying an Apartment Complex Makes Sense In 2020
Demand – In 2020, there’s more of a demand for rental housing in the United States than ever before thanks to the fact that we have more people renting instead of buying properties nationwide than in years past.
Right now, it’s not just millennials, Generation X or Generation Y that are renting, every generation including Baby Boomers are renting units in apartment complexes nationwide.
Why are most people renting instead of buying properties? The answer to this question depends upon whom you ask but, if you look at the economic numbers, it’s easy to see that most people are unable to buy properties, especially in States like California, where a buyer would have to come up with a down payment between $30,000 to $50,000 just purchase a home.
Besides the obvious difficulties that most people have with saving money for a down payment on a house, another reason why more people are renting properties in 2020 instead of buying is the fact that they’re renting because it’s their personal preference to rent.
Some renters may have had a personal experience in years past where they saw a friend, co-worker, or family member, lose their home following the Great Recession and this may have turned them off on the importance of buying a home.
In spite of coronavirus, job losses and the recent riots nationwide, it doesn’t matter what age, race, religion or what someone does for employment, as long as they don’t own their own home, they are going to need a place to live, and this means that rental properties are always going to be in demand.
Another great reason to purchase an apartment complex in 2020 is the stability that comes from owning a multi-family rental property versus owning stocks or other investment vehicles.
Even though some investors may scoff at the idea of owning multifamily properties, the truth is that it doesn’t matter what happens to the economy, stock market, or any other economic factor in the world, as long as the apartment complex and its units are occupied, they will continue to provide the investor who owns the building with stable cash flow on a monthly basis.
Owning an apartment complex gets even better when the investor hires a property management company because of the simple fact that the property manager will save the investor the time, money and hassle of having to manage their rental property themselves.
With a property manager doing all the heavy lifting, an investors time is freed on a daily basis to focus on growing their portfolio of income properties instead of getting bogged down by all of the day-to-day work which comes from having to manage their own rental properties themselves.
In this article I’ve already provided you with two great reasons why an apartment complex is still a great investment in 2020, but another great reason to consider apartment investing is the growth that you can enjoy financially from owning an apartment complex.
Besides appreciation, the longer that you own that property you will have many options available to you including the ability to choose a cash out refinance mortgage, and then use the funds from your first apartment complex as a down payment on another apartment complex.
Yes, there’s always going to be people who claim that single family properties make better Investments than multi-family properties, but the reality is that when it comes to investing in apartment complexes, as Grant Cardone once said “more doors equals more income” and there’s no better way have a lot of doors in your Real Estate Investment Portfolio, in a short period of time, than investing in apartment complexes or other multifamily properties.
By following sound fundamentals, you won’t have any problem at all whatsoever building a stable portfolio of apartment complexes nationwide which will provide you with income for years to come.
What Should You Be Looking for In an Apartment Complex?
Location – The location of the apartment complex that you plan on investing in is by far one of the most important things that you should take into consideration. Ideally, you should be investing in an apartment complex that’s close to major sources of public transportation, schools, shops, stores, restaurants and also major job center where the apartment complex is located.
Area Statistics – Once you choose an apartment complex that’s in a great location, the next thing to look at is the statistics for the area. This means that you should pay close attention to what’s happening with area crime, incomes, economic growth and also the values of comparable apartment complexes there.
Look For Deferred Maintenance – Finding an apartment complex that’s in a great location is fantastic but, if that building has deferred maintenance, this can mean that you may be faced with having to spend tens of thousands of dollars on maintenance before you can even start renting to new tenants.
Besides deferred maintenance, you should also thoroughly review the rent rolls for the apartment complex as well because the owner may have told you that the building has X number of tenants who are paying an average of Y every month. Once you review the books, you may find out that the current owner’s claims are not the case, so it’s best to keep a close examination to the books and rent rolls before you move in.
Decide on The Class of Apartments
One of the most critical issues that you should consider before purchasing an apartment complex is the class of the apartments that you want to buy.
Are you going to purchase a Class A, B, or C apartment complex? Although Class A apartment complexes are ideal, as an investor you should know that class B and C apartment complexes are always in demand, especially times of economic crisis because renters who are may be living in class A Apartments during recessions almost always look for units in more affordable apartment complexes until the economy gets back on track.
The great thing about investing in apartment complexes is that there are always deals out there for investors to purchase them.
If you’ve been searching for apartment complexes recently and have been unable to find deals, don’t lose hope, you should consider utilizing time-tested tactics like driving for dollars, hiring bird dogs, and mailing current owners of apartment complexes.
Apartment complexes are always changing hands, and the good news is that in the coming months, you may be able to find some great deals on apartment complexes nationwide as investors who were hit hard during the recent coronavirus epidemic may be eager sell their properties for discount.
Let’s say that you’re not ready to invest in an apartment complex yourself, you could always get your start investing in an apartment complex by putting your money into a Real Estate IRA, real estate investment trust (REIT), or you could also invest in an apartment complex via a crowdfunding platform.
Contact Trier Capital
At Trier Capital, we’re experts at investing in apartment complexes and multi-family properties across the United States.
We know that making smart investing decisions requires balancing your risk tolerance, goals, market cycles, and investment timeline and what’s best for one investor may not be best for another investor. This is why our company is an investors best asset because we’ve assembled a team of experts that specialize in sourcing, acquiring and investing in multifamily properties nationwide.
To learn more about the services we can offer you, CLICK HERE or call us at (630) 229-2383.