What are the 5 Apartment Hunting Secrets?
Compared to risky and turbulent investments like penny stocks, investing in real estate is one of the more stable options.
Of course, there’s risk involved no matter what you put your money into. But real estate tends to be a steadier, long-term option, if investors buy low and can weather the expected blips in the market.
However, just because real estate is less risky doesn’t mean you should close your eyes, point, and buy.
It takes thorough market and neighborhood research, let alone checking and double-checking past and current financials among other tasks to know whether you should buy or walk away. That being said, check out these tips to help you with your search.
1. Check and Double-Check the Financials When Apartment Hunting
As U.S. News & World Report states, be upfront and ask the owner about the financials: income and expense statements (over the last 3 years at least), rent rolls, and service contracts.
As the article goes on to state, do your own research and verify that these numbers—as well as the leases and other neighborhood information—match up to what you expected.
2. Play Sherlock Holmes (Legally)
Do some (legal) detective work by walking around the apartments, paying attention to the details. Are there cracks or holes in the concrete?
What about a sign notifying tenants of asbestos? How clean is the apartment complex? Do the front and back yards (if the complex has either, one, or both) appear groomed and well-kept?
3. Interview the Tenants
Also, interview tenants. Ask them about how/if they like the apartment complex and neighborhood? How long have they been renting here? Do they get along with their neighbors (potential tenant complications)?
Don’t just listen to what they say but focus on how they conduct themselves. Does body language appear hostile or secretive? Or do the tenants seem relaxed, if not slightly tired? Remember, if you invest in these apartments, these tenants become yours.
4. Research the Real Estate and Neighborhood Markets
Research, research, research. How stable and healthy is the current real estate market? Based on past and current trends, does it seem like the market will be healthy in 5 years?
Also, conduct thorough research about the neighborhood. Use online databases like AreaVibes and NeighborhoodScout to check out the schools and crime rates.
And, run your own tests: would you be comfortable going for a jog or quickly running an errand in the evening? How do you feel when you are in the neighborhood, day or night?
Research the Location
Additionally, look on a map to see how centrally located the Dallas apartments are—to the downtown, public transportation, and schools. Are there smooth sidewalks and bike lanes that make it easy for tenants to walk or ride their bikes?
Check for Potential Health Hazards
Are the apartments close to a chemical plant or factory? Are they located near a landfill or garbage facility? If so, think twice about investing, as these are indicators of potential health hazards.
5. Assess the Property Value Potential
In other words, what can you do to raise the property’s value? Can you refurbish or replace appliances? Repaint the apartment and groom the yards to boost curb appeal?
Think about your target audience, and make changes that will appeal to them. Also, don’t leave property value up to chance.
Run the hard numbers—perhaps use the income approach, determining the potential income rental and annual capitalization rate of the apartment investment. You’ll also want to factor in variables like expenses, future income, inflation, and deflation.
Final Thoughts on Apartment Hunting
Spending the time and doing the research pays off. But that doesn’t mean you have to do it alone—nor should you. Seek opinions and advice from real estate property professionals, as well as assess how much you can and can’t put down with a financial advisor.
What other investment tips do you have? Share them by commenting below.
Thanks to Ashley Lipman
My thanks to Ashley Lipman for this very informative guest post on apartment huntimg. You can reach out to Ashley here: <firstname.lastname@example.org>
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