In a recent article, I talked about the value of multi-family real estate in the current economy. Does the same reasoning apply to commercial apartments? You bet it does as, after all, apartments are just larger examples of multi-family real estate investments. The primary differences between what one would commonly call multi-family real estate and apartments relate to the number of units.
Apartments, at least by my definition, are buildings with eight or more rental units. This is technically multi-family but, when I think of multi-family dwellings, I’m thinking more of two, three, or 4-unit buildings. Why is this difference significant? It has to do with volume of inventory. In most markets, there are large numbers of multi-family buildings and comparatively fewer apartments. See the difference?
The ramifications for you are that to effectively evaluate, make offers on, and select apartments as investments, you are much more likely to need to move out of your primary real estate market to find the kind of deal that meets your criteria as a real estate investor. You might have several dozen multi-family buildings to choose from in your market (among those listed for sale), but only 2-3 apartment buildings, making the ability to play the numbers game a little harder to play.
Here’s the good news. There is a high volume of motivated sellers of apartment buildings, when you expand your search nationwide. With the ability to check out properties online, there are few markets that are out of bounds, and you can tackle the numbers game issue I just alluded to by embracing modern technology.
Naturally, there are also some fundamental principles of apartment investing that you will also need to consider. Is there a demand for rental real estate right now? You bet there is, especially given all of the recent economic challenges face in our country.
Are there good deals on apartments to be had? Also, yes. Because apartments are valued on their income, recent economic challenges have tended to deflate apartment building values across the country, making it an ideal time for you to strike as an investor, and pick up some bargains.