3 Reasons Why You Should Invest In Apartments
Real estate investment advisors tend to focus on single family homes. One reason is because fix and flip is only practical on a house by house basis. Another is that it is easier to buy a house to fix and flip or repair and rent out. However, multi-family real estate investment has a number of advantages. Here are 3 reasons why you should invest in apartments.
More Reliable Income
One benefit of investing in a multi-family building such as an apartment complex with six to eight units over two single family homes is that you'll receive more reliable income. If you have two rental homes, you have a significant risk of no income from one property and a modest risk of no rental income at all. However, when you have multiple units, there will almost always be tenants in at least some of them. This results in nearly guaranteed revenue from the property unless it burns down or everyone has to leave due to a natural disaster. And in these cases, insurance should cover the losses.
You may read about how investing in single family homes allows you to make money a variety of ways. They often advertise how the money you invest is recoupled almost immediately once you start generating revenue. However, residential real estate always has this type of return. With an apartment building, you could actually increase the number of revenue streams, leading to greater returns. For example, you could offer services like trash removal, vending machines in the lobby or concierge services. You might clean up the units, make necessary repairs, remove problematic tenants and add a few minor upgrades. Now you can increase the rent charged to tenants, and the maintenance requirements go down. More importantly, the value of the apartment complex skyrockets.
Single family properties require more maintenance than the average apartment building. You may get cited if the residents don't cut the grass or maintain the pool. You'll need to plan on replacing roofs and fixing foundations. If an apartment building needs the roof replaced every twenty years, it only has to be done once. There are fewer HVAC units per capita. And the property management is dramatically simplified by having everything in one location. Furthermore, it is easier to find property managers to manage an apartment building for you than a scattered collection of single family homes. You don't have to offer discounted or free rent to someone to maintain the premises. You could hire a property management firm to do everything in exchange for a percent of the rent and then rent out that property manager's unit.
What if you invest in condos like those offered through LiveWPB? There are still fewer maintenance issues for you as a landlord than a single family home. You may be called out to fix the hot water heater or provide pest service, but the common areas are the responsibility of the building owners. If you own the condo building, you enjoy a more stable market because those living there take better care of their properties whether they own it or rent units within the building. And you can hire property managers to take care of the pool, the fitness center and club room.