Investing in real estate to rent can be a very profitable endeavour, and some experts argue that one of the most profitable real estate investments you can make is an apartment complex. An apartment complex can be a substantially bigger investment than a house, but if you’re looking for a big-money investment, here are some reasons why you might want to make it an apartment complex:
1 – RECURRING INCOME
Let’s say you own a house that you want to rent out. So you rent it out, and you’re counting on the income, but then one day the tenant decides to move out. The income stops completely because the source was that one tenant. With an apartment complex, you lose this issue: once you get enough tenants, if one of them moves out, the others still keep the income flowing.
2 – LOWER PER-UNIT COSTS
A usual concern when renting out real estate is maintenance. In a single-family setting, like a house, one tenant’s rent has to pay for the repairs, which can get tricky. In an apartment complex, on the other hand, fixing a roof or the piping benefits all the tenants, and the costs can be covered from their combined rents.
The downside, as one might imagine, is the labour-intensive management an apartment complex requires. However, if business is good, the income can pay for the services of a hired manager or a professional management company.
3 – RENT-BASED APPRECIATION
Real estate appreciation can stem from many, sometimes unstable, factors: the growth of the area, local upkeep, and etcetera. With apartment complexes, you can take some control of their appreciation because in their case, rent is a powerful factor. By working smartly with marketing, tenants and management, rent increases can help you protect your investment.
4 – ADDITIONAL INCOME
Apartment complexes, unlike houses, can supply you with extra, non-rent income. Vending machines, ATMs, billboard advertising, coin-based laundry machines and even renting parking spaces can provide you with some extra cash.
5 – FINANCING DEPENDS ON THE BUILDING
If you want to take a loan to buy a house, your personal income is usually the main factor the bank considers. When doing the same for an apartment complex, the bank will consider the building’s earnings, which can help your loan approved even if your credit isn’t optimal. If business is good, you could even make the building pay for itself and the loan, with no expense of your own!
If you need the help of a real estate agent contact us at The Coto Group, at our phone numbers (305.422.9286 / 305.803.3059), and follow us on social media @TheCotoGroup to know more about real estate all over Key Biscayne and Brickell. With over three decades of real estate experience, The Coto Group will solve all your real estate needs.