Apartment Profitability

5 Replies

What is the most important skill to learn as an investor in order to make your apartment investment profitable? 

Where is the money made/lost in apartment investing?

If you were starting over today, what advise would you give yourself as an apartment investor?

for profitability, always drive rents. It is always easier to raise rent $1.00 than to save $0.50. I assume that you will always be frugal on expenses. Keep in mind that as a landlord, this is an investment but to your tenant, it is home. Tenants will not object to a slightly higher rent if the value you offer is worth it. We focus on selling lifestyle not space on our properties. We believe that part of the rent tenants pay is for service so don't forget that how you respond to tenant request is vital to good quality tenants an lower costs.

Originally posted by @Roselynn Lewis :

What is the most important skill to learn as an investor in order to make your apartment investment profitable? 

Where is the money made/lost in apartment investing?

If you were starting over today, what advise would you give yourself as an apartment investor?

 Vacancy is a killer in all things real estate. Better to have a slightly lower rent and lower tenant turnover than trying to push rents excessively. That isn't to say you don't push rents higher, but the cost to lose a tenant if you're not at maximum occupancy is a serious consideration.

Assuming you have more than one unit available, the cost to lose a tenant can be a month (or more) plus make ready costs. Most people use a cost of 1500-2000 per unit turnover as an estimate. So if you take 1750 as the average cost, it takes almost 3 years to recoup the cost of a vacancy created by pushing the rent $50.

Push rent slowly, be behind the curve on rental rates if you're not fully occupied. 

The next biggest thing is to keep up with maintenance so as to minimize large repair costs due to negligent upkeep. The whole, an ounce of prevention is worth a pound of cure argument.

@Nicholas, @Michael  --- Thanks for your responses. 

So overall, understanding Property Management is the most important part of apartment ownership in respect of apartment ownership.

@Roselynn Lewis

While good service is essential to the success in most businesses - as Nicolas and Michael illustrated - most money is made/lost at purchase.  If you overpay for a cashflow and/or do not sufficiently account for obsolescence in an older property, you will rarely come out the other end satisfied.  

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To the above I will add avoiding nitpickers and dirtbags in your rentals.  Screen twice, approve once.  Be patient.   Every time I have hastily placed someone with a story, it has come back to bite me in spades.  A vacant unit doesn't cause drama, bury you in requests, wreck things, have the police over, do drugs, smoke, sneak in pets, cause you indigestion, etc.   Good topic @Roselynn Lewis !