Investing in US Apartments – A Good Strategy?

In my opinion, investing in Apartments in the US has always been a good strategy for cashflow and even growth. Apartments are almost a hybrid of residential and commercial real estate. In the US, anything over 4 apartments in a building is classified as a commercial investment, but still driven by residential trends and demographics. On the other hand growth or appreciation of apartment buildings can be more linked to the Net Operating Income (NOI) of the building, more like the CAP rate of a commercial property. As much as capital growth in residential, particularly in a large number of US markets is not something you bank on, in apartment buildings, it can be something you have more control over.

For instance, if the rental returns in an area are rising or if you are able to rehab/renovate some units to increase the rental return, then the overall value of the apartment building will also increase, regardless of whether residential property is softening in the market or not. Its kind of having the best of both worlds in one investment. If the market in a region is booming and more and more people are buying homes, then house prices appreciate, and often apartments can “rise with the flow”. On the other hand, if markets are softening, becoming more of a buyers market than a sellers market, people get nervous, start selling and renting for a while. Rents can often increase as the demand for rentals rise, which can then increase the NOI of the building and hence, its value. Win – Win!

Now, there is a number of factors though, you need to take into account when looking at apartment buildings as an investment:

1. Management

Firstly, there is much more management involved. Apartment buildings are not necessarily for the “passive” investors, or those that want to sit, and forget their portfolios and just let them be. With the higher number of tenants involved in one building there is always a lot more management needed, even if you have a property manager in place.

2. Vacancy

You always need to factor in a vacancy rate for your portfolio, apartments particularly. Now one of the major advantages of apartments over houses, is that if you own 1 house and the tenant leaves, you now have a 100% vacancy rate on your portfolio until you are able to tenant the property again. If you have a one 7-apartment building for instance and one tenant leaves, that’s only a 14% vacancy rate. But understand, there is a good chance, particularly if you have a couple of apartment blocks that there will always be a couple of units vacant at any one time.

3. Affordability

Apartments can be much more expensive to purchase upfront, and costs such as property management, maintenance, insurance etc can also be higher as these are often treated as commercial investments if 4+ units. Need to ensure you factor in these costs when determining your returns and cash flow. Which brings me to the last point…

4. Returns

Returns on apartments can often be higher than single family or multi-family homes. Given the higher management and increased costs, the returns though can be better. If a particular area is giving 7-8% ROI in Single Family Residences (SFR’s) you may find apartment buildings can be 12%+, sometimes even higher!

If you are looking at a passive rental portfolio, and not afraid of the increase management and costs/affordability of apartment buildings, they can make an excellent addition to a portfolio. We have clients realising returns of over 17% on some apartment buildings and have seen EBIT’s (earnings before Interest and Tax) of over 25% possible – making sure to factor in increases in costs, maintenance and a vacancy rate.

If this is something you are interested in adding to your portfolio, book a call with us today!

the best and most expensive homes sold in Detroit in 2018.

Lets have a quick look back at some of the best and most expensive homes sold in Detroit in 2018. Even though most of these are not investments, and most likely out of our reach but does show what is available and what areas buyers are paying top dollar in. We can use this information to source good properties in these areas and ride this wave. A couple of the regions will surprise you and a few of the better areas of Detroit are strangely missing (Grosse Point, Boston Edison) that were there last couple of years. Harper Woods is a great area near University District & Bagley where there is still some great deals available; and I was lucky enough to stay only a couple of blocks away from the Indian Village mansion when I was there in November last year!

Click the button below for the full article from “Curbed Detroit” or you will also find it posted on our Facebook site – Enjoy !!

Read the Article Here

Top 7 Traits of A Successful Real Estate Investor

This weeks education piece, I thought we would look more generic and put in an article from recent Forbes Magazine (or is that eZine these days? or iZine says Apple? Anyway I digress)

Over this Christmas, New Year break it can be a good time to reflect and look at setting up for 2019 for your wealth strategies. Firstly as I mention briefly before, we are finally putting the finishing touches on our online Flipping Academy! If you have ever wanted to know how to source, renovate and sell your own “Fix and flip” property then this will be for you! Stay tuned early January for details on how to get onboard!

Secondly, it can be good to look at what makes a good Real Estate Investor. Why do more than 70% of investors never get more than 1 property, never really see the wealth that Real Estate can bring? This article can show what qualities you may have or can work on 🙂

Click the button below for the full article from “Forbes” or you will also find it posted on our Facebook site – Enjoy !!

Read The Article Here

How to Buy Property in the United States: 4 Tips for Australian Home Shoppers

The property experts at Zillow, the leading real estate marketplace in the United States, share their tips for Australian home shoppers looking north.

Maybe you fell in love with a new city while on holiday in the US. Maybe you’re itching for a new experience. Or maybe, after observing the American dream from afar, you’ve decided to pursue it for yourself.

Whatever the reason, you’ve decided to move to the land of opportunity. But the prospect of navigating a foreign tax system, calculating extra administrative costs or learning about a completely different housing market can feel overwhelming.

For Australians looking to buy a home abroad, here are tips to keep in mind.

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What Sydney’s Median House Price Will Get You in 10 US Cities.

MADELEINE WEDESWEILER DOMAIN REPORTER FEB 21, 2017

For first home buyers and investors locked out of the property market the grass may be looking much greener in the United States.

Prices in Australian cities are as high as they’ve ever been with Sydney’s median house price hitting $1,123,991, according to Domain Group data.

Even the median price in New York City is much cheaper than Sydney’s at $US626,600 which in Australian dollars is $829,179.

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