Owning an Apartment Complex Pros and Cons

The Pros and Cons of Owning an Apartment Complex

Should you invest in an apartment complex? Or should you not? The best way to make these decisions is to look at the reality of what the positives and negatives will be in your everyday life as an owner of an apartment building. Do the potential hurdles seem manageable to you, or even excite you as a challenge you will work to wisely overcome? Do the positives seem worth that work?

The easiest way to make this decision is to look at the practical pros and cons of owning an apartment complex. Think about them carefully and how an investment of this level can fit into your life.

The Pros of Owning an Apartment Complex

The biggest reason to buy an apartment complex is the income. When compared with investing in a single-family home as a rental, an apartment complex offers a higher and more consistent income. With only one tenant in a property, when they move out, you have a dry period. It is unlikely that your apartment complex will become vacant all at once. While one tenant moving out, or even a few at one time, will happen, that will be a small fluctuation for your monthly income.

There is a lower cost per unit with an apartment complex than there is with a single-family home or even a duplex or triplex.

If you invest in several single-family homes scattered around a city, maintenance work will need to be done in multiple locations. With an apartment building, it’s all under one roof.

When compared with other types of investments, like the stock market, buying an apartment complex is a low risk and high reward investment.

An apartment complex is an investment you can pass on to your heirs.

The Cons of Owning an Apartment Complex

An apartment complex costs a lot more money up front than a single-family home investment. The upfront costs puts this kind of investment opportunity out of a lot of investors’ budgets.

Maintenance is a lot of work. It is all under one roof, but that work is complex and full of apartments with many working parts that can break. There will be tenant phone calls complaining of broken sinks or loud neighbors. Fortunately, you can hire people to help with most of this. A property manager can field phone calls and handle new tenant applications. A maintenance crew can handle the building. You will still have to manage those people and make your investment is being properly taken care of.

You will have to pay size-able real estate taxes. This is worse in some states than others. You will have many other expenses too, like insurance for apartment building owners

Selling an apartment building can be more difficult than selling a single-family home. When you sell a single-family home, you put the property up for sale on the market and likely sell to a family wanting to live there. When you sell an apartment building you’ll only be selling to other investors who will haggle hard for a deal.

How Do I Know If I Should Invest In An Apartment Complex?

As you can see, owning an apartment building has many positives as an investment. As with any high reward and low risk investment, it does take a lot of work. Learn more about getting started here. If you’re considering your options for investing in real estate, it is wise to make your own pros and cons list. What are you looking for in an investment, and what are you willing to put into it? A personal list will help you determine what will work best for you and your financial goals.