Once you’ve made the decision to go into real estate investing, the next step is to find the right property for you. For many first time investors, an apartment building is a good place to start. Choosing the right building is critical not only to getting financing for your investment, but also for making sure your project is profitable. Buying an investment property is a bit similar to buying for yourself, but it also has a few important differences. Make sure you get the right building the first time by keeping an eye out for a few things.
If your goal is to rent out units in the apartment building, it’s essential that you find a property in a good rental market. As Atlanta recovers from the housing crisis, Diana Olick of CNBC reports that it’s become a hot market for rentals. Clayton county in particular was ranked second in the country for rental returns, providing investors with annual returns that average 28 percent.
Typically, good rental markets are places where the cost of housing is still relatively low, but where there is a good amount of demand for rentals. In the case of Clayton county, median home prices are around $50,000, according to CNBC, and there’s a fair amount of demand for housing as the job market improves and people get back on their feet.
Along with being situated in a strong rental market, the apartment building you’re considering should be located in a good neighborhood, one that people will actually want to live in. Just as you should talk to the neighbors when looking for your own home, you also want to talk to the neighbors before investing in a building.
Find out about the quality of the neighborhood. Do people feel safe living in the building? Is there a supermarket within easy walking or driving distance? Ask about the quality of schools nearby, neighborhood activities and transportation options. Pay attention to the facts when deciding on a building, not your emotions or how you feel about a property.
You want a building that will not only appeal to people with its location, but also with the things it has to offer renters. Hire a professional inspector who specializes in multifamily units before you move forward with the purchase. The inspector will let you know of any serious issues with the building’s systems. Also look at the amenities in the building. If it doesn’t feature things such as in-unit washers and dryers, is there laundry on site? Are there are extra features such as a pool or fitness center? If so, does the building have a lifeguard on duty to protect residents when they swim?
Ideally, the best apartment building will be one that offers you a steady flow of income from preexisting renters. You don’t want a building that will require a lot of work upfront or that won’t help you recoup your initial investment.