Buying a whole apartment complex is different from buying a single unit or a home. It is more involving in many ways. You should first make sure you thoroughly vet your agents to get the best deal since it is an investment worth lots of money. Here are some things you need to put in mind when you decide to buy an apartment complex.
Before buying an apartment complex, you need to decide if it right for you. You should know that a complex will bring about more responsibilities compared to a single unit. Lay down all the pros and cons involved by the help of your real estate agent. You can also take your time and do more research.
An apartment complex will generate income for you based on occupancy. For you to generate recurrent positive cash flow your units should maintain a good percentage of occupancy. To ensure this happens you will need to make sure that your apartments are in good condition, there is security and favourable restrictions. If you do not get people to want to occupy your units you will be faced by taxes and other maintenance costs that you may not afford.
Having an apartment complex saves on the cost of maintenance compared to a single unit. When you have some repairs done there are minimal wastage of materials. The remaining materials can also be used on another area. If you are repainting for example on several units, some paints might remain. Instead of storing it risking expiry, you can use it on those other units that you will end up repainting anyway.
Financial the apartment complex especially from the bank is easier. Unlike when buying a single unit apartment where the bank looks at your individual credit score, when purchasing a complex it will look into the financial situation of the building. If the building is doing well financial the bank will readily approve your loan. You can end up buying a building even when your credit score is low.
When it comes to management, complexes require intensive management especially for large buildings. It can be overwhelming for you to manage such a building on your own. It is advisable to hire the services of a property manager at a cost. They will be charged with the responsibility of all the issues arising from all tenants as well as even collecting rent and depositing to your account.
Renters will not care for your property. Most tenants tend to not care for your property since they do not own it. You will frequently encounter damages that need to be addressed. These damages are mostly seen when the tenant vacates their unit and you need to do maintenance for another tenant to occupy the space. It is expensive especially if you have to frequently repair the apartments.
To make the investment on an apartment complex worth your money, make sure you get the figure from the beginning right. It includes age of the building, capacity, financial turnover or even maintenance costs.