By now, you have seen why we love real estate and heard the many, many benefits of investing in real estate. You know many of the reasons why we LOVE investing in apartments. Let’s look at HOW we target our properties.
There are many apartments on the market. We do not just pick any of them to own. We have a business plan and strategy on picking our properties.
What do we look for?
We look for apartment complexes in markets that have job growth and diverse economies. Job growth and diverse economies help ensure there is a strong tenant base during an economic downturn. During economic growth, this creates strong demand for housing and increases market rents.
We tend to look for properties that can support an onsite staff. We have found that these properties usually have 100+ units. While that is not a steadfast number, it is a number we typically use when looking at properties. Additionally, we look for a “working class” tenant base and a median household income of around $50,000 or more in the sub-market surrounding the property.
We also look at apartment complexes that have some sort of value-add potential so we can force appreciation. In many cases, these properties have deferred maintenance, high expenses, or room to add different amenities. These properties are in growth areas where the market and tenants support these types of value-add plays.
For example, in one of our properties, we have added property-wide WiFi. We were able to secure a great ‘bulk rate’ and charge the tenants LESS than what they could get from the local internet vendor. Most tenants were already paying for internet. We were able to secure a great deal on the internet contract and the tenants love the fact that they can be on the SAME network at their house, while they are grilling, or at the pool. It is also cheaper for them and the internet is installed when they move in. There is no wait period when they move in!
We also look for properties that were built in the 1980s or newer. These properties tend to have some deferred maintenance but nothing too large where the buildings are not inhabitable.
Not every property we look at meets our standards. In fact, only about 10% of the properties we look at meet our criteria and our business plan. We only submit offers on the properties that meet our criteria. In certain cases, we can make exceptions, however, these are only on properties that can meet our investor’s returns.