Where to find an apartment complex for sale
Investing in residential property is a common way for individuals to set their capital to work in real estate. Many start off with a single family unit or duplex, but if you want a more diverse portfolio and better efficiency, investing in an apartment complex could be a better option. Install a property manager, and you won’t even have to get into the business of managing tenants or maintenance – you can concentrate on your day job, or on finding the next great real estate investment. However, finding an apartment complex for sale isn’t quite as easy as finding a single family apartment or house.
For a start, multi family blocks of more than 5 dwellings are characterized as commercial rather than residential investments, so they are often sold by commercial brokers, not residential realtors. While Zillow, for instance, can be useful if you’re searching for duplex or triplexes, it’s unlikely that you’ll find a whole apartment building there. You’re more likely to find one on Loopnet, which specializes in commercial deals.
Real Estate Brokers
Probably, though, rather than using Loopnet to find the right property, you’re better off using it to search for good commercial real estate brokers. Often, the best deals don’t show up on Loopnet; they get snapped up much too quickly. Sometimes the broker just has to make one phone call to an investor, and that’s it – the apartment complex is gone.
Make a note of brokers who have a number of potential properties on Loopnet, and then phone them – not just about the individual properties you’ve seen, but for a more general chat. Tell them what you’re looking for, including your priorities (income? Capital growth?) and your investment amount and time frame, as well as any red lines (for instance, whether you’ll consider refurbs or not; any neighborhoods you don’t feel inclined to purchase in).
Some brokers will just take down your details and that’s the last you’ll hear from them. But the good ones will be back in touch when they have something for you. Set up a face to face meeting if you can, and then keep in touch – reply to every email they send, and if a deal isn’t for you, explain why. If it’s just down to price, work out what’s the maximum that you would pay for the project, and tell them – they may be quite glad of the ammunition to get a client to lower the asking price, you never know!
REITs and real estate funds
If you manage to get two or three really good brokers on your case, you’ll find good apartment complexes to invest in and you’ll have a great little network of property professionals, too. But if this sounds like a lot of hard work – and it is hard work – you might prefer to look at alternative ways to invest in real estate, through REITs and real estate funds.
Finding REITs is really easy – they’re quoted on the stock exchange. There’s no rush to buy them against your competitors, because shares are traded every day, and in the bigger REITs, practically every minute. The market is transparent, since like other quoted companies, REITs have to publish regular filings showing their financial stats. And REITs give you the same big advantage as an apartment complex; they pay a regular and stable income. Instead of monthly rent, you’ll get quarterly or monthly dividends.
But the biggest advantage of REITs? You’re not exposed to a single market, but you can diversify your portfolio. Instead of, for instance, having one apartment building in Florida, you can invest across the US, and overseas, and across different classes of property including offices, hotels, and data centers.