The Pros And Cons Of Investing In An Apartment Complex
There are so many different ways to invest and make money in the real estate industry. Many people buy one or two homes to rent out. Others buy and rehab homes. A different approach — one that is less common, but still worth considering — is buying an entire apartment complex. You then end up in a scenario in which you have plenty of renters paying you each month. However, owning an apartment complex also has its challenges, and it is not for everyone. Here are some pros and cons to consider if you're wondering whether buying an apartment complex is a good way for you to invest in real estate.
Pro: You only have to buy one.
If you buy an apartment complex, you'll instantly be a big player in the real estate industry. You won't need to seek out more properties as you might if you were to purchase single-family homes or duplexes. Buying an apartment complex can come with more red tape than buying a smaller property, but you still only have to go through the process once, which can be really good news if you're not a fan of paperwork, closing meetings, and banking applications.
Con: There's a lot of upkeep to worry about.
Running an apartment complex is an entirely different task than renting out one or two apartments. You'll almost certainly need to have a staff to collect rent, keep up the apartments, landscape, run the rental office, and so forth. This is not something you can do in your spare time; it will become your career. And even if you dedicate all of your time to doing so, managing a staff of landscapers, rental agents, and other personnel is not for everyone.
Pro: You'll probably inherit renters.
Finding renters can be one of the most demanding parts of owning and renting out real estate. You have to screen people's backgrounds, do credit checks, show the apartments, and ultimately decide who you want to lease to.
When you buy an apartment complex, though, you're likely to inherit a lot of renters with the purchase. You won't have to jump right into reviewing lease applications and looking for new renters. If there are some vacant units, then of course you will want to fill them. However, most apartment complexes have waiting lists of prospective tenants already, so this gives you a good start. You can own and run the property for a year or two before you have to dedicate resources to finding more tenants.
Con: The complex may be hard to sell.
If you own a single-family home or a duplex and decide you want to get out of real estate, you can put that property on the market and be pretty confident it will sell within a month or two. Selling an apartment complex, on the other hand, may take longer. It's a niche property, and there are simply not as many people shopping for apartment complexes. So, make sure you're really interested before you decide to buy the complex.
Pro: You'll have lots of options for expansion.
When you own a whole apartment complex, the options for expanding your business and earning more are seemingly endless. You may put up some additional apartments on any empty land. You can update the current apartments so that you're able to charge more for them. You can even add amenities, like a pool or gym, to increase the property's value. Some people really like having this opportunity for expansion.
Is buying an apartment complex a smart move for you? Hopefully, after reviewing these pros and cons, you have a better idea. Talk to a real estate agent to learn more about apartment complexes.