Is there a good revenue in owing a apartment complex?

Answer 1

Short answer is "Do the math".

When I look at an investment property I look at a number of things:

1. Expected income (including a vacancy percentage).
2. Expected appreciation/depreciation of the property. Important not all property goes up. If you are in a down market, depression, or one industry town things can go from bad to worse quickly. Larger cities have a better chance of rebounding. Also older buildings start to have problems.
3. Short expenses such as property taxes, utilities (if applicable), maintenance, etc.
4. Long term expenses such as water heaters, roofs, plumbing, etc.
5. Interest expense when financing.

I typically associate a number to each of these items and assign a worst and best case scenerio to each of them. And then I "do the math".

You also need to think of an exit strategy for any investment. How/when are you going to sell, how long will it take, etc.

Good luck.

Answer 2

The national average for return on investment for residential rental real estate is about 7%

That means that if you buy a place for $100,000, on average, you can expect to make $7,000 a year in rent.

If you find a place that can command more than 7% rent, you're doing pretty well. If the place will get less than 7%, you should probably look for a better investment.

Of course there are other considerations:

1. You likely will finance the purchase, so for your $100,000 property, you may only be putting up $20,000, so you're actually making a lot more than 7% return on your money. You have to figure in the interest you're paying on the loan against your return, but you'll also be building equity in the property as you're paying the mortgage down.

2. If you buy a property that appreciates in value, you not only will get rent revenue, you'l be able to make a profit when you sell the place. But don't make the mistake of thinking that real estate always goes up. It usually does, but there are many times where real estate values have dropped and taken many years to recover.

3. If you're handy and buy a place that needs some work, and you do that work yourself, you can sell the place when it's fixed up for more, or rent it for more.

Answer 3

There can be, depending on the specific circumstances. You have to look at several factors, including but not limited to:

*cost of building (mortgage payment)
*number of units
*rental market in local area
*age of facilities (maintenance costs)
*management skills
*tax laws
*insurance costs
*capital for risk (catastrophe or emergency repairs)

All things considered, you need to do some rough calculations to determine if it's a feasible investment, then dig deeper into the math.

Take a 5 unit building with 1 bedroom apartments. If each unit rents for $1000 a month, you could expect $40,000 per year gross rental income (a 25% vacancy rate is a nice conservative estimate when calculating feasibility).

If the mortgage costs you $3000 a month, your gross profits of $4000 a year wouldn't cover taxes, insurance, maintenance, etc. so it would probably not be a wise investment.

However, if your rental market could support $1500 a month, and you could reduce your vacancy through longer-term lease agreements and get your vacancy down to, say, 10% annual, your gross income would jump to over $40,000 a year.

It all depends on the variables and especially the market. However, one thing to keep in mind is that you are buying a piece of real estate, which always has value. So even if end the end you break even on rental income vs. mortgage/ownership costs, you are still being "given" a building which some day you could sell for 100% profit.

Hope this makes sense!

Answer 4

There can be. Like all rental properties, it's nice when you have renters. The idea behind owning any rental is that the property goes up in value, meaning that you have a gain when you sell it. Meanwhile, you collect the rents and pay the bills and pocket what's left (don't forget to plan for taxes and expensive repairs.) Every year you get to deduct the bills and depreciation from the revenues and you pay little or no taxes until you sell it. The downside is that you never know when some clown is going to destroy the place or leave without paying 3 months rent or you wait 6 months for a new tenant.

Answer 5

Not unless you don't have to pay them interest. Owning them isn't profitable either; that's why there aren't many apartment complexes. (And congrats, you just won the biggest moron of the day award.)

Answer 6

Yes and it depends upon the area. Location is everything when it comes to Real Estate.

Answer 7

sure if the units are being rented, and the people living thier aren't scum bags that destroy the place