An apartment building investment doesn’t have to be the equivalent of preparing yourself for a career in neurosurgery. Far from it! To be sure, you could find many more than three factors to consider when making the final decision about choosing the right property, but you could also make a solid decision based on no more than this.
Neighborhood
A cogent point was made at the recent Meet the Masters of Income Property Investing, hosted by Platinum Properties Investment Network. The point was this. It’s better to buy a run down property in a good neighborhood than a nice property in a bad neighborhood. By “bad” neighborhood, we refer to those which have depressed property values. A dedicated apartment building investor can find a poorly managed property and increase its profitability considerably with a few shrewd moves. If the area around a commercial property is already beaten down, it’s tough to improve profitability no matter what you do.
Hartman Metrics
Take a look at the metrics generated by Property Tracker and recommended by Platinum Properties Investor Network founder and president, Jason Hartman. A few numbers to focus on. Can you afford to make the down payment? If you can’t, nothing much else matters. Also look to the Cash Flow, which should be positive and based upon a realistic assessment of the vacancy rate. Cash On Cash Return and Total Return On Investment are two other figures that are nice to know. We’ll look at all these in more depth later. For more information, visit www.PropertyTracker.com.
Diversity
The kind of diversity we’re talking about here is within your portfolio. You probably don’t want to sell all your residential properties and buy one massive apartment building. What if the local market collapses and you’re left holding the bag? Diversify across regions and properties. Don’t fret about buying an apartment building investment unless you have value left in your portfolio in different cities to help even out the rough patches.
The Commercial Investing Center Team
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