Apartment Investing
What are the Costs of Successful Apartment Investments?
By Buyincomeproperty.com
Nov 5, 2005, 23:16

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.