Pros and cons of flipping apartment buildings as a high yielding real-estate investment.
Buying and Selling is a known technique for making profits. In real-estate, buy and sell is a common method for income generation. Investors identify the areas where more properties are sold and choose to buy the property. Similarly, selling when everyone else is buying is a proven practice.
Flipping homes after repairs fetches profits in high demand areas. The ability to be able to get the modifications by an expert contractor at an affordable price is crucial. The amount spent in the buy and sell process must not exceed the profits.
Buying and selling of single-family homes, condos, duplex houses, town homes, and so on is a profitable investment depending on the market. There may be a certain wait period of couple of years between the buy and sell process.
The investment in buy and sell is high and differnt loans may be available for the purchase. Additional buyer and seller fees can be claimed during the buying and selling. Apartment buildings are a popular choice due to the rent roll and cash flow during the entire period.
Apartment buildings are multi-family residential units with multiple or single owners. They are preferred for buying and selling because of the availability in every part of the country.
Apartments are rented or leased and have monthly or yearly rent collected by the owners. Maintenance of the apartments are done by the management and any repairs are taken care by the owners. Renting clauses guide the renting process and leasing options.
Apartment buildings are preferred by many renters due to the reduced maintenance burden. Homeowners in contrast incur huge expenses for maintaining their properties. Apartments are free of maintenance by the renters. The buy and sell investors have to take care of the maintenance of apartments.
Maintenance charges, bills, taxes, and so on add up as the Net-Operating-Income (NOI). For apartment buildings, the capitalization rate (cap rate), is calculated by dividing the Net-Operating-Income (NOI) with the purchase price of the property. Profits in Buy and sell buildings is achieved by selling at lowest cap rate and buying at highest cap rate. Higher cap rate results in high risk investment.
Buy and sell apartment buildings results in steady cash flow in terms of rent collected.
The loan amount is reduced as the rent collected can be used to repay the loan amount.
Property value is appreciated due to the maintenance performed and keeping the property up to date.
Enormous amount of profits can be realized in buying and selling buildings in a less period of time.
Investors can pay themselves Acqusition fee while purchasing the building and get Sponsor fees while selling the building. After repairs and modifications, investors get the units under contract to avoid huge losses. Outsourcing the maintenance of buy and sell buildings is one of the ways to reduce hassles.
Buy and sell buildings is profitable only if all the calculations are considered. Bad choices in purchasing, maintaining, or selling may result in losses for the investor. Knowledge of the local area market and influencing situations is also crucial.
Here are some disadvantages of buy and sell buildings.
Here are some steps to get started with buy and sell buildings.