If you’re looking at apartment investment opportunities, you may be thinking
that buying the building is going to be your biggest hurdle. But there are a
myriad of details to attend to when it comes to successful apartment investing.
Not all of these issues are going to cost money, though many will. Take a look
at some of the costs of apartment investing that aren’t included in the purchase
of the building.
Maintenance
If you have rental property of any kind, you probably already know about
maintenance costs. The banes of landlords are that renters are seldom worried
about taking good care of the property they rent and always ready to call the
owner or landlord for repairs. This is no less true of apartment investing, but
multiplied by the number of apartments in your building.
You have some options regarding maintenance costs on your apartment
investment. One of the most popular because it’s often cheaper in the long run
is to hire a “handy man” to live on the premises. You can usually offer a
stipend plus rent in return for having someone on hand day or night to handle
minor repairs and oversee repairs of more major problems.
Remember that you’ll likely be required to follow applicable ordinances
regarding repairs.
Management
Hiring an apartment investment and management company may be your best bet
for management of both your investment dollars and the building itself. You may
want to oversee the rental process, balance the books, and take care of all
those other details yourself, but handing it off to a company with the
experience and with the staff to handle the entire process may well be worth
their cost. On the other hand, a management company is going to be much less
devoted to making your apartment investment profitable than you would
personally.
One advantage of a management company is that you’ll get regular reports
regarding your apartment investment which may help you make more informed
decisions. You also may find that a management company will be able to help set
rental rates, deposits and lease terms on your apartment investment.
Renting
If you don’t hire a management company, you’re going to be faced with the
task of advertising, listing and selecting tenants, overseeing the collection of
rents and taking steps when you don’t collect. Finding long-term renters is a
good idea, but you have to feel out your local market to discover how to attract
and keep those renters.
Pricing is one issue that greatly affects renters. Priced too high, you’ll
only get those who are willing to pay the rent for a short time until they find
something else. Priced too low, you’ll attract those who think there’s no need
to care for the rent.
Don’t overlook the need to screen renters – it’s an important step in
protecting your apartment investment.
Insurance and All the Rest
You’ll probably have some minimum insurance to meet your lenders’
requirements, but don’t overlook the need to protect your apartment investment.
Your insurance should be sufficient for that purpose, even if it exceeds the
lender requirements. Don’t forget about a policy to cover accidents and remind
tenants that their personal possessions aren’t covered by your building policy.
There could be additional costs along the way, but if you figure them all
into the amount of your initial investment, you may find that apartment
investing is a very lucrative option for the real estate investor.
