Tips for Successful Apartment Investing

Summary: Today we’re digging deep into all things apartments — from apartment investing itself all the way to the different avenues within it that you can try out.


 

Let’s get specific about investing today. We talk about how to boost your income all the time, and the many, many exciting ways to do so. It’s about time we narrow in on one specific niche that we LOVE…apartment investing! ❤️❤️

We have a sweet spot for apartment investing, but it’s important to understand the ins and outs before diving in headfirst (no financial concussions, please).

This method can be wonderfully rewarding and lucrative but can also be tricky to grasp if you’re new to it. We know that not every type of investing is right for every person, and our goal is to help you find the best way for YOU to expand your income and thrive.

By the time we’re done here, today, you’ll know if owning an apartment complex is the right move for you. If it is…you will also have all the tips you need for a successful start‼️

Here’s your sneak peek of what we have in store 〰️

The journey of a thousand miles begins with a single step…

Let’s break it down ⬇️

5 Steps to Start Apartment Investing

We love giving you practical steps towards success, so here’s how to get started:

No. 1  Find out if apartment investing is right for you

Seems like a logical place to start, right? ?? Here’s what it all comes down to…cost and time. We always want to make sure the payoff is worth the capital and effort you’re putting in. Sooo what are the costs, you ask?

First, you have to buy the complex, so there’s your initial capital requirement. Then, you have an ongoing cash flow matrix to consider that involves upkeep and tenant management.

As far as your time goes, owning and managing apartment complexes can be a biiiit of a commitment. Think about what goes into handling tenant turnovers, leasing paperwork, and maintenance issues. Take a look at your schedule and finances, and just make sure there’s time, energy, and money to take on this new adventure. ✨

No. 2  Determine the type of apartment building that’s right for you

Just like any type of property, apartments come in all shapes and sizes. How many units and stories an apartment has determined cost and benefits. There are geographical factors, too. Where is it located and what is the area like⁉️

Remember, the name of the game is making sure the return is greater than the cost going into it. You want to find a purchase price that makes the most sense and can turn a profit. (Preferably a high one, right?) Remember the cost of repairs and rehab, too.

No. 3  Identify the right property to buy

Ooookay, we’re getting to the fun stuff‼️ When you know what you’re looking for, it’s time to actually start the apartment hunt. You can totally do this on your own, or with the help of a real estate pro. Sometimes a combo of both is the way to go.

Ever heard of a real estate investment club? It’s a great way to network and build relationships with other investors. Good old Google will give you some options for local investment clubs or you can reach out to investors in your personal and social media circles.

Working with a real estate broker can be super helpful, but just remember, commercial listings have a higher commission fee than residential listings. 😎😎

No. 4  Mind your due diligence

Exciting things are coming… but it’s important to not jump the gun toooo early. Once you narrow in on potential properties, there’s still a bit of research that needs to be done. Basically, you need to know EVERYTHING about your potential apartment complex. Location, units, amenities, and condition of the building are factors that will help you calculate rent prices and repair costs.

Then there’s the stuff under the hood that you may not be able to see. It’s a great idea to hire an inspector for the complex, and then to go through all the legal documents, leases, and tax returns from previous owners with a lawyer. 

Let a pro do this part, because you do notttt want any “surprises” coming up that affect your future earnings! ^^^ ??

No. 5  Make an offer, finance the complex, and close the deal!

Phew. If you’ve followed the previous steps, you’re ready to take the plunge! 🌊

Of course, you want to be smart about the offer you put in, and how you prepare to finance this undertaking. You can get an appraisal based on market comparisons and potential income, and some investors also use the replacement approach to estimate the cost of building a similar complex. Now you need to get a commercial loan, which will usually come from traditional and private lenders.

Here are a couple of things to be aware of when applying for your loan…

Be ready for lenders to require interest and cash reserves, and to favor high market potential and high occupancy rates. BUT ALSO, lenders for commercial deals tend to focus on your building’s earning potential, and less on your personal finance history (which is great!).

5 Questions to Ask Before Buying an Apartment Complex

Let’s say this route sounds appealing, and you’re ready to dive into owning your own apartment complex. Ask yourself these 5 questions first, so you can think like a pro while doing your market research. 

No. 1  What are the apartment classifications?

In the U.S., any apartment complex will be classified on a scale from “A” to “D”. All the factors we discussed earlier, like size, units, quality, and location will go into the classification. This helps you balance out what’s affordable, with what may need some extra TLC later on.

No. 2  What’s the return on investment?

It’s verrrrry important to know what you’re getting back from your capital?  In fact, that’s the whole point, right? You’re trying to make more money than you’re spending. Calculate your expected income from the property and subtract your expected costs.

No. 3 What are the construction details?

This may seem repetitive, but we know this is a TON of info we’re throwing at you. Sooo this is your reminder to hire that inspector we talked about earlier. You want to know about all past or possible issues in roofing, plumbing, mold, etc.  The more you know, the better prepared you will be!

No. 4  Do you know your numbers?

Knowing what’s up with alllll the numbers involved — like purchase price, your projected rent income, operating expenses, and net operating income — is super important before investing.  Yes, there’s a bit of math involved, but we’re trying to multiply your income, so of course, you’re going to deal with some numbers.  C’est la vie?? 😘😘

No. 5  Is it beneficial to hire property management?

Managing your property can be fun and interesting, but also quiiiite time-consuming. ?? If you want to free up time from handling the day-to-day operations of your apartment complex, it MIGHT be worth hiring a property management company.  If you’d rather spend your time pursuing other opportunities and income streams (practice makes progress, right?)…  Then by allll means, hire yourself some help!

5 Ways to Invest in Apartment Buildings

Maybe you’re thinking, “Wow, this all sounds amazing, but too time-consuming for me right now.” We hear you! Owning an apartment complex is awesome, but a lot of work! So let’s look at all the options available to you in apartment investing.

No. 1  Purchase it yourself

(This is what we covered above, remember?) Buying your own apartment complex is the option requiring the most time, research, and money…but being in control of your complex and making your own decisions is also the most rewarding.

No. 2  Partner up

Partnering with another investor is a great way to get started in apartment investing because you share the costs and effort involved.  The other side of this is…not everyone plays nice with others, right? Choose a partner VERY wisely if you go this route because you’ll be making lots of important decisions together.

No. 3  Apartment syndication

Apartment syndication is an appealing option for creating one of our favorite things – passive income. ? This requires one thing from you, as an investor, and that’s the money. You will share in the potential profits (with others, of course) but you won’t do any of the metaphorical heavy lifting.  (If this sounds like your jam, check out this post alllll about apartment syndication)

No. 4   Real estate funds

Real estate funds are like syndications, but bigger. Your investment will be higher and will be used throughout multiple properties. You still get the benefits of passive income, but you may not know where and how your money is being used. Just put in some extra research to a fund to make sure it’s where you want to spend your money.

No. 5  REITs

REITs, AKA real estate investment trusts, are a great way to diversify your investment portfolio. Your investment is in a company, rather than a particular building. Think of it kiiiiinda like buying stock in a company, yeah? The company decides what to do with your capital, and you share in the profits.  As always, do your research before investing in anything‼️

Sooo, how much money can you make in apartment investing?

We hope you see that the potential is out there. Preparation and knowledge are key, which is why we’re here giving you all the deets today. 🤓🤓

Apartment investing isn’t about tossing your money up in the air and magically multiplying it. We know this approach takes time, planning, research, and, yes, numbers and math. But the more you prepare, the better your potential income will be. ??

There are no shortcuts here. But with knowledge, hard work, and due diligence, you CAN grow your income while enjoying the exciting world of apartment investing.

We are SO passionate about this investment niche (obvi). And we want you to be successful if this is the right route for you. Ready to take on apartment owning yourself? We can help answer any questions you have along the way. Ask us anything.

Do you prefer a more passive income stream while we handle the day-to-day decisions? Learn how to invest with us!

We’re rooting for you, friend! 🙌

 


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We're Palmy ➕ Nancy Kitti 〰️ The Kitti Sisters

A sister duo team obsessed with all things financial freedom, passive income, and apartment investing + apartment syndication, who turned a $2,000 bank account into a nine-figure empire.  Now, we're sharing with you the behind-the-scenes secrets of our wealth building strategy.

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