Are you ready to make your next big real estate investment? Whether you’ve owned smaller rental properties before or you’re just getting into the market, a multi-family rental property like an apartment building will offer you an impressive return on your investment.
The thought of purchasing a large-scale property like an apartment complex can be intimidating, but there are countless benefits and available resources that make this venture worthwhile. Keep reading for some key facts that potential investors should know before taking the plunge.
1. Ideal Locations
Location is key to the success of any real estate investment, but rentals are especially affected by their surrounding neighborhoods and opportunities. Before you settle on a property, ensure that the location is viable for your tenants.
Some standard factors to consider are the crime rate, school system, job market, and shopping venues in the area surrounding your prospective property. You may choose to market your property to a specific type of tenant, so you’ll need to be mindful of their specific needs as well.
For instance, college students appreciate apartments that are within walking distance to campus and are near shopping centers or work opportunities. They may be more likely to rent units in your building if you can meet this need.
For families, you can try to seek properties that are close to grocery stores, public parks, and elementary schools. Tenants with children will be more receptive to housing options that make their daily tasks and commutes more convenient and manageable. If you can appeal to at least some of these preferences, you’ll have an easier time keeping your units full.
2. Versatile Properties
All multi-family rental properties don’t have to look or function the same! While you likely have an idea in your head of what a typical apartment complex looks like, there are plenty of ways for you to market your property to fill an underserved niche or capitalize on the needs of your area.
For instance, you may choose to buy a property with many small units to cater to students. College towns are always in need of more affordable housing options, making this a lucrative choice. To fulfill student tenants’ desire to be close to campus, you could purchase a property near the school and convert it into a multi-family rental. Investing in a property like this could be a great step in between single-family rentals and a large apartment complex.
In contrast, you could use this investment as an opportunity to develop a growing community. A multi-use property with both residential and commercial units would give you the opportunity to profit off of both types of rentals and offer your tenants a nice living space and convenient work and shopping options. If you can develop a business plan for your rental that takes your target audience and your local market into account, you should be set for success.
3. Financing Options
While large and multi-use properties are ambitious investments for individual investors, you’d be surprised to know how many financing options are available to you! For example, you could apply for a commercial loan that would help you finance your property purchase. This can help you separate your personal finances from your rental business’s activities. If you’d prefer to divide the financial responsibility among multiple investors, you can choose to buy the property with a partner.
4. Potential Income
It’s important to note that while large-scale rental properties are expensive to purchase, they offer many great financial benefits that will serve you in the long run. If you have previous experience with smaller rentals, investing in a multi-family or multi-use property will provide a significant increase in income because you’ll have more tenants and fewer, shorter vacancies.
Further, real estate investors can take advantage of several tax benefits that exist to ease the burden of your rental business’s day-to-day costs. For instance, regular property maintenance expenses like repairs and replacements are deductible.
With these factors in mind, you can decide if buying an apartment complex or a multi-use property is the right investment opportunity for you. Not only will this purchase further diversify your portfolio, but it will also provide you with a steady source of income that will benefit you for years to come!