Are you thinking of buying an apartment complex? Some points to consider are its location, how much property tax you would have to pay, the number of units you will be getting, and your capital. Read ahead to find out more.
Location is one of the most important factors when buying an apartment complex. Even if the building is great, not many people would want to come and live in it if it’s not in an ideal location. Look for areas with easy transport and proximity to amenities. You should also consider the average housing expenses and utility prices in each location. Have a look at local listings, search for terms such as apartments for rent, do your best research, and get a clearer picture of these indicators.
Of course, some locations are more in demand than others. You would be able to attract a lot of tenants by having apartments in such areas.
Depending on the location, the property taxes you would have to pay would differ. Even if the town or city is great, it might not be the best place to own an apartment complex due to its high taxes. Speak to a property lawyer beforehand to get the best idea of how much you will have to pay.
Consider the Number of Units
You’re probably buying the building, as you want to steady source of income on the side. Looking for complexes that have at least 12-20 units that you would be able to rent would be the best.
The building’s physical condition is important. If it requires a lot of repairs, you might end up spending through your nose. Always go for the buildings that require the least work. However, this might be easier said than done.
Even if the building doesn’t require much work now, it might in the future. Hire an inspector to inspect the premises before you put down an offer. There may be several issues lurking that you’re not aware of.
You will also need to check if you qualify for a commercial mortgage. Your collateral and creditworthiness come into play. As you might have guessed, commercial mortgages are more expensive than regular home loans.
While on the topic, be wise about who you work with. Working with large, reputed names like Best Mortgage Solutions is a good move, as the whole process could become complicated otherwise.
Return of Interest
Considering the capital, you will be spending, how many units you will be getting, and the overall maintenance that you will have to do, how will your profits look like? This is called your return of interest.
Although you might make the most by buying a large building with many units, the upfront capital that you would have to pay would be a lot. It might not be worth it in the end. Considering the ROI of the project would have helped you avoid this.
Hopefully, you found all the points that were discussed useful. There are many things to consider before taking the leap. One of the most important would be the location the apartment is situated in.