What are the pros and cons of investing in a rental apartment building?
I want to buy an apartment building with 20 units and 2 levels.
I want to be a landlord.
Tell me what are the pros and cons of this.
Isn’t it really cool that I never have to get a job again?
there’s the fact that landlordship is highly competitive and the facts thats the clients are generally not locked in, so if they find a better deal, they’ll leaves you high and dry. one thing to avoid this is opening upa motel. they pay immediatley and its simmilar to being a landlord. and everyone wil hate yor guts b/c landlords are along the lines of being in the irs. but good luck
i’ve been a landlord since 1989 and never worked a day since….
Pros:
Economy of scale – the costs of services, management, repairs should be less per unit for a 20-unit property than say two 10-unit properties, or five 4-unit properties. Improvements you make to common areas will also allow you to increase rents for all of the tenants, assuming the absence of restrictive rent regulation laws.
Long-term appreciation – over the long term, apartment buildings are the best asset class for investment
Cons:
General management headaches – toilets, trash, lawsuits, etc.
Short term depreciation – over the short term, your property will probably drop in value due to the rough economy. Will this be a deal-breaker? Only you can decide this (with the help of competent tax advisors).
Tax write offs – cost depreciation, mortgage interest, expenses
Your ROI, or return on your investment, not accounting for debt service, will probably be about 6-8% of the purchase price on average, per year. Stories of folks retiring from multifamily investments in a handful of years are just that: stories. Over a significant period of time, however, you should be able to do so.
http://www.multifamilyinvestor.com