The Basics of Apartment Building Investing

Published: 02nd February 2008
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If you are considering getting involved in commercial real estate investing, then there are a variety of individual markets that you may want to consider. Some of the different markets to consider include raw land, industrial warehouses, apartment buildings, office complexes, and many more. However, one excellent type of investing that you may want to give some consideration is apartment building investing. No doubt you will want to know a bit more about apartment building investing before you get started, so let's take a closer look at the basics of real estate investment in apartment buildings.


Why Choose to Invest in Apartment Buildings?
More than likely you are wondering why apartment building investing is such a great idea. Well, one of the main reasons to consider a real estate investment in this particular market is because they usually carry fairly low risk and they also help to keep up with inflation because they only deal in short term leases. So, as the market begins to rise, you can increase your income as well. Also, when you get involved in investing in apartments, you'll find that you can enjoy equity appreciation as well as good cash flow. Many investors have found that investing in apartment buildings is a great choice because of the huge demand and the low risk. In fact, many statistics are showing a rise in demand for apartments, since so many people cannot afford to own their own home.

How Much Will I Need to Get Started?
Now that you understand why apartment building investing is such a great idea, you need to take a look at how you can get started when it comes to this type of real estate investment. Well, first of all, you are going to have the down payment available, which usually is about 30% of the total purchase amount of the apartment building. However, the amount of equity that you invest in an apartment can actually affect the investment returns and the risk that is associated with the apartments. So, for this reason, usually a larger down payment is a safer risk.

How Can I Qualify for a Loan for the Entire Purchase Amount?
Actually, it is the building that must qualify for the loan; however, you do have to provide the security to your lender as well. You will find that almost all lenders for apartment buildings will require that you guarantee the loan personally. However, usually they will not give you the loan unless they think the building will provide plenty of cash flow to cover the loan payments. So, when you are involved in apartment building investing, you'll find that your lender actually has quite a bit to say about the amount of cash that you will need to invest in an apartment offering.

How Can I Manage My Investment
When it comes to managing your real estate investment, there are a variety of different ways that you can approach this. There are some investors involved in apartment building investing that take the time to manage their property on their own; however, others decide to hire managers for their property so they can concentrate on other things. If you have a building that has at least 20 units or more, usually it will actually support the cost of having a professional live in manager. However, if you have a building that has less than 10 units in it, it will be more cost effective to manage it yourself. So, if you go for larger buildings you'll be more likely to be able to afford management. There are many professionals available out there to help you manage your apartments when you are involved in apartment building investing.

How Can I Analyze Possible Investments?
If you are planning on purchasing an apartment building as a real estate investment, then you first should take the time to look closely at the past couple of years' history. Look at the expenses and the income for the past couple of years and also take the time to inspect the entire building as well. Even looking at the tenant files is a great idea as well when analyzing possible investments. This will help you see what you can expect to make in the next few years and also should help you determine the price that the property is really worth.

The Importance of Finding a Broker that is Qualified
If you plan on getting involved in apartment building investing, one of the best things that you can do is to find a broker that is qualified to help you out. Having a good broker that is qualified in the area of real estate investments that you are interested in can be a huge help. They can help you find properties that may be right for you and can also help you make sure that you are aware of the laws in your area as well. So, if you are serious about apartment building investing, having an experienced broker on your side is a great plus.

As you can see, there are many great benefits to getting involved in apartment building investing. However, you will have to do your part to make sure that you truly make money off of these investments. So, take advantage of these basics and use them to your advantage to maximize your profits.






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