Today, there are many types of real estate investments out there. Investment in apartment buildings with Realty One Group Music City is one of them. Over the past decades, investment in multifamily properties has proven itself to be reliable and profitable for investors. For you to get the best out of the multifamily property investment, you need to do your due diligence. One way to do that is by carrying out the necessary valuation on the property before investing.
In the rest of this post, you’ll find everything you need to know about multifamily property investment. This will include the Pros & Cons of apartment building investment as well as how to get an accurate valuation on the Apartments Value platform.
Pros and Cons of apartment building investing
As with other real estate investments, investing in multifamily properties has its strengths and weaknesses. Because of its weaknesses, this investment type isn’t for everyone. Instead, it’s strictly for people who’re looking to achieve a slow but steady appreciation in their investment portfolio value.
- People that invest in apartment buildings often enjoy various tax benefits. With this investment option, you can always use a variety of strategies to minimize the tax obligation in your state. One of the tax advantages of multifamily property investments is a lower tax rate on passive income. However, to achieve these benefits, you need to work with an experienced tax professional.
- Another advantage of apartment investing is that it’ll provide you with a very strong and stable cash flow. Cash flow, as used in this context, means the net rental income that remains after factoring in all other expenses.
- Apartment building investing also provides investors with supplementary income. As an investor, you can always generate extra revenue monthly for services and amenities in the building – a good example is parking lots.
- In the long run, an apartment investor can always achieve an increase in equity for the building. During the time of ownership, the building will continue to increase in value until you decide to sell it. Mostly, the building will increase in equity as soon as other comparable apartments in the area start selling at a higher price.
- One of the weaknesses of investing in apartment buildings is that it has very limited liquidity. First, it takes a lot of time to sell an apartment. As such, it can always take months to liquidate. Even after finally selling off the property, you might end up not getting back all the cash you invested into the apartment.
- The tenant issue is another thing you need to worry about when investing in apartments. You need to understand that tenants are unpredictable. Even if you thoroughly vet your tenants, they might end up giving you problems as time goes on. What if your tenant stops paying the rental fee because of one reason or the other? This is one of the many issues you may face with an investment property.
- As earlier mentioned, apartment investing provides investors with stable cash flow. However, you need to understand that this investment type also requires a stream of expenditure. You need to pay various maintenance and repair fees to keep the building modern.
Valuation matters a lot
Now, you already understand the advantages and disadvantages of going into apartment investment. If you feel this investment type is for you, what is next is to start looking for a suitable building to purchase. However, before you finally decide to invest in an apartment, you need to carry out the necessary valuation on the property.
Unlike in the past, you don’t need to pay for expensive appraisals in today’s world. Baby providing relevant details regarding the apartment you’re looking to buy, Apartments Value can always help you out with analyzing and valuing your property.