An apartment can be a high-risk investment, as you may end up dealing with tenants who don't pay rent and expensive property maintenance. You might also have difficulty selling the apartment down the street. Investing in apartment rentals can be a great way to mitigate the risks of future losses. Owning apartments guarantees an income and reduces the risks of high vacancies.
If you manage to rent half of them, you can guarantee that your business is paying for itself. You can also ensure that your business is able to maintain mortgage payments. The main reason for buying an apartment complex is income. Compared to investing in a single-family home for rent, an apartment complex offers higher and more consistent income.
With a single tenant in a property, when they move in, you have a dry spell. It's unlikely that your apartment complex will be vacant all at once. While one tenant will move out, or even a few at a time, that will represent a small fluctuation in their monthly income. Apartments are coveted by many real estate investors for their powerful cash flow and other benefits, but there are also risks when investing in apartments that need to be examined and addressed.
There are almost as many different theories as there are apartment blocks, and it can be difficult to delve into the subject to find the truth. Therefore, when buying apartments for rent, you must ensure that you have a plan to compensate for any unexpected events that may occur in the future. Investing in apartment complexes requires careful consideration of many different factors, such as asset type, location and regional market trends, to determine if a property ultimately meets your personal investment strategy. Suburbs like Ultimo and Haymarket in Sydney, for example, are those that are dominated by a large number of unit blocks, but apartments are still in demand.
The data in the following table compares the average rent amounts paid per person for studio, one-, two- and three-bedroom apartments. This means that you have a very experienced pair of eyes watching your apartment to make sure it's a good investment. Increasing the NOI works because the price of an apartment doesn't depend on how much other apartments in the area are looking for. Apartments can be good investments because they can provide strong cash flow, an appreciation you can control, diverse sources of income, scalability, centralized maintenance, and significant tax benefits.
The purchase of apartment complexes offers investors the possibility of generating wealth through real estate assets that are in high demand in many parts of the country. As with other forms of investment in rental properties, tenants are repaying the apartment loan and the landlord increases their equity in the property every month. Investors should also consider the state of the market when deciding if a new or old apartment is the way to go. Compared to other types of investments, such as the stock market, buying an apartment complex is a low-risk, high-reward investment.
Apartment blocks with views will obviously favor the upper floors, which can be a big boost to the value of the property. This is why many investors partner with others to buy an apartment or try to enter into syndication agreements.