LOS ANGELES, CA – Starting, as an apartment investor is a good thing because you will gain tons of knowledge on how property investing works. The cash flow that comes from renting apartments is great along with the loans the bank gives out. The professionals at the Local Records Office talked to a few investment experts on how newbies can make money by investing in apartments to rent.
“Ever since I was younger I noticed there has been a big demand in apartments all across the country, and we expect that to continue. The biggest groups in demand that I’ve seen are ‘echo-boomers’. These are the children of baby boomers. With the growing demand on shopping centers, it brings in demand for apartments in the area” says, Christopher Loner from RT&Y Realtor LLC in San Diego, California.
Getting a Loan From a Bank
“Loans are widely available to borrowers to buy his or her first apartment building. Banks love lending to apartment investors because the income stream is consistent and steady. Banks see apartment investors as a safe loan for this reason unlike lending to new homeowners that will not bring in income besides the mortgage every month. “ Says Brandon Christenson from Villa Doors Investment Group in downtown Los Angeles, California.
4 Things to Look Out for When Investing in Apartments
Have a goal: You need to have a goal when investing in apartments, is your goal to benefit from the cash flow? Earning extra money to prepare for retirement? Are you planning to live in the apartment? Is it all three? You need to think about how you’re going to accomplish a goal.
tArea / Location: There’s a saying that goes “You can fix a property but you can’t fix a location”. If the location is declining the property will go down with it, the tenants will start to move out and that will be a bad thing.
The first thing you should look for is JOBS. How is the job market in that area? If there are no jobs there will no tenants, that simple.
Contacting the local management company in the area and ask them about the employment market is a great way to start. Management companies know what attracts tenants and what makes them move, most of the times they will let you know upfront.
Property: What is the properties condition? You want to know what you’re getting yourself into before investing in an apartment. You need to look at two things the exterior and the interior. When looking at the exterior you need to pay attention to:
- The condition of the roof
- The landscape
- Look for what needs to be repaired
- Cracks on the wall
- Cracks on the floor
When looking in the interior of the apartment look for these things:
- Condition of the drywall
- Does the hot and cold water run properly?
- Insect infestation
All of these things are crucial to look for as a beginner. You don’t want to buy an apartment only because it was on the market. The best thing to do as a beginner is to find an apartment with the least repairs needed. The last thing you want to do is major rehab. Too risky!
Numbers: You need to make sure that the properties income exceeds the properties expenses. By giving the numbers 12 months to see if money is being made or not.
Management Strategy (BONUS): The last thing you want to do as a beginner is to deal with tenants on your own, you need to hire a licensed management company to collect rent, hire the right people to do repairs, give out eviction notices and all that’s needed to do.