Keeping your money in the bank offers you easy access, but the returns are often small. To achieve your long-term financial goals, you have to invest. One of the best investment options is purchasing an apartment complex building. In fact, it is one of the tried-and-tested ways to build wealth.
Though it can be a fulfilling investment, apartment investing can be more complicated than you might think. As an investor, you have to put in a lot of time and effort to make sure your apartment becomes profitable. To determine if becoming an apartment building buyer is right for you, here are the pros and cons of owning an apartment:
What Are the Pros of Apartment Complex Ownership?
Buying an apartment can have major advantages. Some of its benefits include:
Source of passive income
The biggest advantage to owning an apartment is it is a passive income source. You will receive monthly rental income from your tenants. It can be an ideal investment opportunity for you if you want to make some money on the side or have additional funds to secure your finances for retirement.
Supplementary income
Aside from rental income from tenants, you can have other sources of income when you own an apartment. Some of the most common supplementary income sources are parking spots for non-residents, laundry machines, and vending machines. These can be profitable if your property is located in urban areas.
Tax incentives
Investing in real estate provides you with tax incentives. As a property owner, you are entitled to tax deductions, including maintenance repairs, travel expenses, insurance, property taxes, and interest on your mortgage and credit cards used to make purchases for your property. It can help you save money in the long run while you earn additional income.
Syndication or partnership potential
Other investment options, like stock or bond, allow you to invest by yourself, but apartment complexes let you invest by groups. You have the opportunity to team up with other investors, make the most out of your investment, and maximize your potential profits as you buy bigger properties.
What Are the Cons of Owning an Apartment Complex?
Owning an apartment building has multiple advantages, but it also has several potential downsides, including:
Vacancies and tenant issues
Tenants provide most of the income generated by your apartment complex. Unfortunately, they can cause you serious problems, especially if you failed to screen them properly, and they turn out to be financially irresponsible who cannot pay rent on time. Some may even cause significant damage to your property. When this happens, you may have to evict them forcefully and look for new tenants again.
Maintenance expenses
To make your tenants satisfied with their living conditions, you have to keep your apartment in excellent condition. You are responsible for maintaining its cleanliness and ensuring that the light bulbs, appliances, elevators, and more are working properly. This is why you have to allot a significant amount of money for maintenance, repair, and replacement costs.
Conclusion
Investing in an apartment can help you grow your wealth, but you should carefully consider its pros and cons to make a well-informed decision. After all, purchasing a property involves a huge amount of money and hard work, which is why you have to remember the information in this guide and take all relevant factors into account.
If you think buying an apartment building is your best option, then you’ve come to the right place. At Buying Apartment Buildings, we can share with you insights to help you prevent costly pitfalls. Get a no-obligation offer today!