Apartment buildings fall under commercial real estate, but they’re often used for residential purposes. This dualism makes them attractive investments with a depreciation schedule that’s typically faster than other commercial assets.
Moreover, apartments offer amenities that you can’t find in many single-family homes. This includes clubhouses to host parties, playgrounds for children, fitness centers, and more.
- No Maintenance Costs
Apartments are a better option for those looking to avoid the hassle of maintaining their own property, such as landscaping, replacing appliances or fixing A/C and heating systems. This is a big advantage over owning a home, especially in the long term.
Apartment owners experience fewer expenses than homeowners, including homeowner’s insurance, mortgage insurance and property taxes. They also receive tax deductions for interest on mortgage loans and credit cards, as well as maintenance costs and travel expenses.
In addition to low maintenance costs, many apartments offer resort-level amenities, such as security, parking, laundry facilities and gyms. This attracts younger single people and baby boomers who don’t want to deal with home maintenance as they age. It’s also a good choice for people who want to live in a prime location without a major financial commitment.
- Convenience
Apartments are usually located in convenient locations and have access to amenities that would cost a homeowner more, such as a swimming pool or gym. Plus, the convenience of a manager or management company being onsite to handle maintenance requests or leasing questions is a big plus.
On the other hand, apartment living isn’t always as easy as infomercials and real estate shows make it seem. You can still be faced with the hassles of dealing with people above or below you who may cause a noise issue or leave early. You also can’t personalize your apartment with paint, stickers or major furniture changes without corporate approval.
Owning an apartment complex can be lucrative for investors, but it requires a lot of capital and knowledge to manage properly. It is also much less liquid than other investments.
- More Space
Apartments are a great option for people who either don’t qualify for a mortgage or don’t want the responsibilities of homeownership. Apartments can also be more affordable than purchasing a traditional home, and can offer amenities such as pools, gyms and covered parking.
Small apartment living can be cramped, but there are ways to make the most of your space. For example, repurpose a dresser into a nightstand and hang a statement piece of art to visually expand the room.
Storage is also a smart investment for those with small spaces. Invest in furniture that can double as storage, such as ottomans that open up for storage or sofas with pull-out beds. Finally, don’t let empty walls or nooks go to waste; utilize them for storage with shelves and hooks.
- A Better Lifestyle
Apartments are usually located closer to businesses, schools and public transportation than single-family homes. This makes it easy to get where you need to go and saves you from the hassle of driving.
Also, most buildings have on-site parking, fitness centers and pool facilities. This saves you the cost of paying for a separate gym membership and makes it easy to connect with your neighbors.
Lastly, most apartment complexes have a body corporate who takes care of exterior maintenance, gardens and more. This means that you can enjoy your weekends without worrying about the grass being uncut, weeds growing or having to pay someone to shovel snow. This saves you time that you can spend on more enjoyable things like a day at the beach or enjoying a smashed avocado.
- More Time
Apartment investment can take up a lot of your time, especially if you’re involved in selecting and financing a property. Once you’re a property owner, you will have to spend a lot of time marketing your apartments and ensuring that they remain occupied.
While smart multifamily investors carefully select real estate in great locations, there’s no way to know what will happen in a neighborhood over the long term. The neighborhood could shift and become a hot spot or it could experience significant deterioration that could negatively impact the value of your investments.
Renting offers a more flexible lifestyle that can be beneficial for people who are working on building their credit or mentally preparing to make the commitment of home ownership. Apartments are also an excellent option for people who need to relocate to another city or state.