Investing in Multi-Door Apartments

There are several niche in real estate investing that a new investor can choose from. There are the foreclosed properties that normally sell below their market values, upscale homes in exclusive subdivisions, condominiums, and multi-door apartments.

Among the most common and preferred type of real estate investment here in the Philippines are multi-door apartments. Here, I will highlight the many advantages of investing in multi-door apartments over the other types of properties.

Higher cashflow equals higher passive income.

Having several units versus a single one generates more cashflow and passive income to your pocket. In addition, you are spared from the risk of 100% vacancy rate when you have several units. In single homes, your passive income vanishes with your tenant when they decide to leave. In mutli-doors, having several units almost always assures you of a continuous cashflow even in the unfortunate case that one or two of your tenants could not pay or leave you. And one more thing, having several tenants pay for the monthly amortization of your property is a great feeling!

Less Competition and Fewer Supply

Apartments are much fewer compared to house-and-lots and condominiums, therefore there is less competition should you decide to sell the property after some time. In addition, taking into consideration the law of supply and demand, less supply means higher prices.

Economies of Scale

You can also take advantage from economies of scale when managing multi-door apartments. That’s because having more units entails you to much lower repair and maintenance costs as opposed to a a single-family home. When scouting for contractors, you can also bargain for lower service charges.

However, before searching the advertisements and buying the first multi-door apartment you see in the market, you must also be aware of the red flags when it comes to apartment hunting. If you’re scouting for your very first real estate investment and want to focus on apartments that can put money to your pocket on a regular basis, then it also pays off to know if a particular property is the right deal for you. Listed below are the red flags you should watch out for when looking for apartments to invest in.

•  The numbers do not suit your budget or there are missing numbers that the seller can’t provide. If after several negotiations, you and the seller could not come up with a win-win figure that can provide adequate returns for you, then it is likely that the property is not really meant for you. In addition, if the seller cannot provide all the details that you are requesting, then something must be wrong with the property. Move on and continue scouting.
• Dilapidated property on a not-so-good location. Yes, the apartment may look okay in the ads but it is during the ocular where you will see the actual condition of the property. If it looks like you will be needing to shell out a significant amount of cash to do repairs, and the apartment is located away from landmarks such as malls and schools, then the property is probably not worth acquiring.
• Posted in ad sites for a long time already. If the property has been on the market for a long time and has not yet been bought, then it only means that the apartment is selling at price not proportional to its fair market value. Skip this and move on to other properties.

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