Now is a great time to purchase real estate! Let’s face it; we are now living in a buyers market. With more and more properties on the Kenyan real estate market, sellers are facing some stiff competition, and are being forced to lower their prices in order to contend with other hungry sellers. This leaves ambitious buyers with a great opportunity, however, while timing could not be more perfect to buy your first piece of real estate, it is vital to know what kind of property is going to best maximize your profits. After all, the goal of investing in real estate is making as much money as possible, while spending little.
When most people think about investing in real estate, the first thing that comes to their mind is duplexes and single-family homes. This is because many people are under the false impression that certain money saving strategies like fix and flip, and no money down is only available when buying single-family units. In fact, these same options are available when purchasing multi-family units like apartment buildings. In reality, purchasing an apartment building is often the smarter, and most cost effective choice. An apartment building can be easier to occupy, less time consuming, and can also be the most efficient way to maximize your profit. An apartment building can be a lucrative investment, if done right. A good investor seeks out the best advice, gathers all the information he or she can and then chooses the right building. A great investor will get to know local real estate agents and other investors—and find a mentor. Savvy investors won’t allow emotions to govern any final decisions; they’ll do the math and ensure they can afford any loans.
With the demand for houses increasing in today’s buyers market, developers are continuing to build more homes. As we all know “demand” gives these developers the power to price these new properties as they see fit, and that price is more than likely going to be high, however, many people cannot afford to pay the mortgage that comes along with the increased price of the home and look to a more affordable way to live. In this case, apartments, with their lower monthly rent, become more appealing to buyers.
Lets not forget, that the potential for increased demand in these apartments, can increase the cost of rent, because with even with an increase in the amount of rent that needs to be paid per month, the gap between mortgage payments and rent is still quite large, leaving apartment buildings as the more affordable option. Don’t forget, though, that many people are still caught in the intrigue of owning their own home, and while an apartment can be appealing to a younger crowd, they are not as appealing to those looking to raise a family, or to start their new married life. This in itself is advantageous to you as well as a buyer because while many people are looking in the market for homes, you can be facing less competition in the apartment market.
When you invest in an apartment building, you have the ability to hire someone to manage the property for you. You, as owner of the property, can enjoy all of the benefits of owning the property, while others put in the effort and the work to keep it running effectively and smoothly. While hiring others to manage your property can help to save you time, the ease of having all of your units in one place can also be very efficient. When purchasing several one family units, your properties can be spread out in several different areas. Separate home leads to separate bills, mortgage statements, etc. You, as property owner, would have to spend a great deal of time traveling from property to property to ensure that everything is running as it should be. With an apartment building one stop can lead to all units.
When buying a home, owners’ expenses often include taxes, and insurance. These expenses do not cover any maintenance that may become necessary to the property or any other problems that may occur, which could make it necessary for the owner of a home to dig in to his own pocket in order to solve these problems as they arise. However, went renting an apartment building, the expense include maintenance of the property, utilities, management, taxes, and also insurance. This can make the cost per unit of the building less expensive for the owner, which makes owning an apartment building, once again, more cost effective.
Listed above are only a few reasons as to why it is a better deal as an investor to invest in an apartment building vs. a single-family unit. Investing takes a great amount of research, and I would expect you as a homebuyer to do your homework before going out and buying any property!