Rental investment offers a multitude of possibilities and the types of properties that can be considered for investment are as varied as they are heterogeneous. If you are interested in the subject, you have probably read here and there that the best type of real estate investment is undoubtedly parking, because of its low entry cost. You may also have read that for lovers of tax exemption, Duflot investment is a must. A few sites and blogs later, you may have discovered that the ideal is to buy an apartment to renovate, in order to be able to deduct the cost of the work from your taxes. And by extending your research, you have discovered that the Holy Grail is ultimately the apartment building, to buy at a price per m² well below the market price and thus offer unbeatable profitability .
It is to these buildings that we are going to focus today. And I’m going to show you that no, really no, you shouldn’t invest in an apartment building .
From the start, you will understand that investing in an investment property will not be easy . Full of enthusiasm, you will begin your research. And quickly, your motivation will find itself confronting a problem. Not only are there few properties on the market, but there are also no people able to support you. Your real estate agent knows how to present and sell a house, no problem. A flat? No problem! A building? Uh…
And yes, our dear (very dear… 🙂 ) real estate agents are generally not used to managing the sale of a building. It’s called lack of experience. Also their relevance to this type of property very often proved quite relative. Of course, there are exceptions. But this lesser knowledge of apartment buildings on the part of these professionals in the field will clearly not make it easier for you to give your opinion, believe me!
Second, your bank will potentially be very surprised at your choice of investment . Quite simply because once again, your banker friend doesn’t know what it’s all about, because he’s never had the opportunity, or rarely, to find an investor interested in buying a building of report.
Negotiating your mortgage is already not easy. Understand that convincing your banker to follow you in an investment that he does not know, and therefore on which he is basically reluctant to lend you money, will certainly be a great challenge! Suffice to say that you will have to roll up your sleeves to present a concrete file . If you finally manage to pass this trying ordeal, your worker will in turn have to preach the good word to his superiors . It is then possible that the latter are just as surprised as your initial interlocutor, and that they do not follow you to invest in a beautiful apartment building.
It’s a lived experience, the case happened to me a few months ago!
When you start to take an interest in optimizing your finances or investing, you will quickly come across the following truth: it is essential to diversify the nature of your investments to limit risk. If all your savings were placed on the stock market in a single company and that company went broke or went bankrupt, you would be broke.
It is the same for a building. If your only building was in an area suddenly less attractive to tenants, all the apartments in your property would potentially be empty . And above all, you would find yourself with no money coming in! Boring when you have just taken out a mortgage over twenty years.. 🙁 With 3 apartments spread over different sectors, you might have lost only one rent against all those in your building. A solitary building does not allow this geographical diversity and the concentration of all your lots in a single place is dangerous in the medium and long term.
And as long as the lots making up your property are all identical, you will be competing on your own in the event that several are to be rented out simultaneously!
One of the advantages often put forward to justify investing in an apartment building is that you are the sole master on board, the sole decision-maker. It is indeed true… Bad news: this is reflected in the fact that you are also the sole payer ! The various works and others necessary for the maintenance of the building will be entirely at your expense. All potential upgrades will puncture your meager gains, so difficult to acquire. Ditto for the upgrades.
Having a tenant is good. Having several is better. Except when they don’t get along with each other. Because as much when you are the owners of a single lot in a building you do not have to worry about the cordial agreement of the tenants, as much when all these lots belong to you it is… Different. And yes, they will not fail to ask you directly to settle their little neighborhood quarrels. And even if it is not directly your responsibility, you have every interest in listening to their request. Neighbors who can’t see each other are bad for the natural upkeep of common areas! It’s just as bad for their presence in the long term, and poor listening to your residents could quickly turn into notice of departure.
Acquiring an apartment is already complex: between checking the different rooms, electricity, gas, water, exposure or layout, finding the property of your dreams will be long and tedious . But what about the checks to be carried out in the case of an apartment building! Each point that I have just listed, supplemented by all those that I have forgotten, is to be checked for each of the lots of the buildings that you will visit. 3 batches? 3 times more points to control! And vigilance on the common areas will of course be increased, because in the end you will be the only one to maintain them . The roof? Same observation. The facade? Same fight!
And then you will ask yourself questions that you don’t ask yourself when buying a single apartment. For example, do the different lots in this building have independent electricity meters? And yes, there is no question of advancing the electricity charges for everyone , it would be tempting the devil! The same goes for water and gas meters, of course.
As you will have understood, buying and managing a building is not easy . Of course, the line is deliberately drawn to the extreme in this article. The idea is not to scare you, but to prepare yourself properly if you decide to try the adventure of apartment building. Cartoonish features help convey messages.
Because yes, the associated profitability can be well worth the candle. Yes, the building is a type of good where it is good to invest. But as in any project, you have to prepare, anticipate and work correctly and diligently on your file. And from there, yes, really yes, you can invest in an apartment building ! 🙂
Anyone interested in this type of investment? What difficulties have you encountered? For those who don’t dare to try the adventure, what are your fears? Finally, if you enjoyed the article, do not hesitate to share it around you. Links for Facebook and Twitter are just below. Thanks in advance ! 🙂