Profile picture for ramkol9

Columbus,OH.Planing to invest in rental property 16 unit building in an apt. community. Pros& cons?

Have good credit, stable job, pays 100K+, house in MI paid off and rented. Recently moved to Columbus, OH. Thinking of investing in rental property. Please advise. Options, pros and cons
  • August 31 2013 - East Columbus
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Answers (5)

Best Answer

Profile picture for larryeul
Hi Ramko19

  you are thinking out of the usual real estate box. I like that!!

Pros- 16 units, all in one location.
Cons- 16 unit building, you can only sell to another investor. Yeah, check on Cap Rates and ROI, and then calculate 6 or 8 per cent interest rates and see what value of 16 unit apt building is.. you wont like it.
  Financing- check this out... often commercial loans will have Adjustable rates... again, calculate higher interest rates (what, think we are staying at almost 100 year low rates??).
 
  I would think about either houses or townhouses... something you can fix up and eventually sell to homeowner to occupy... new paint, carpet, kitchen, etc gets big returns.. your 16 unit building- you are only selling to another investor that wants a great deal, just like you.
Best to you.
  • September 01 2013
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Profile picture for ramkol9
Priyanshu and Larry,

Thank you both for details and great advise. Appreciate that

Ram
  • September 01 2013
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Hi, 

The first thing you need to look at is the Cap rate:

Capitalization rate (or "cap rate") is the ratio between the net operating income produced by the property and the price you will pay to buy the property or alternatively its current market value. 

Also look into the following:

The quality of the neighborhood in which you buy will influence both the types of tenants you attract and how often you face vacancies. 

Property taxes are not standard across the board and, as an investor planning to make money from rent, you want to be aware of how much you will be losing to taxes. 

Your tenants may have or be planning to have children, so they will need a place near a decent school. 

  • August 31 2013
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Profile picture for ramkol9
Thanks Charles. The property is one of the buildings in a large apartment building complex and is already managed by the property management. I was trying to understand the risks if any in owning a property like that
  • August 31 2013
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Research your local market area hire, professionals to assist you (CPA, Real Estate and Certified Appraiser). You stated that you have a very good paying job which is great. How much time will you have to spend away from your high paying job? If you can't get time away you should hire a professional property manager.

Read every real estate investment book you can find (not just the "get rich quick books). Research the neighborhood before your investment, get out of your car and walk the streets.
  • August 31 2013
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