Investing in commercial real estate is not hard when you have the right people working with you. Buying an apartment building is one way to play the property market in Vancouver. The potential in the city is enormous, and you can expect to get good returns on your investments. However, it is useful to know what to look for when you want to buy an apartment building. If you are a first-time investor, then having the right information will go a long way. Here are a few basic matters.
The most important feature of an apartment building is its income generations. You buy an apartment building to rent out to tenants or turn it into something else. Whatever the case, you want the building to bring in income. Therefore, you have to consider the income potential of Vancouver apartment buildings for sale before making any final decision. Get a building’s profit and loss statements so you can review them. Looking at the income history will give you an idea of the type of business you can expect.
NOI and CAP Rate
Understanding the profitability of an apartment building is also imperative. The net operating income (NOI) is the measure that you can use to learn about profitability. The NOI is the annual net after subtracting all costs. Once you have the NOI, then you can calculate the capitalisation rate, which will give the value of the property. It works by taking the NOI of similar buildings and dividing that value by their purchase prices. The CAP rate is usually a percentage and the lower it is, the more expensive a property is. So the CAP rate of a building will tell you what you need to know when gauging the value of multi-family buildings for sale in Vancouver.
Learning about the trends in the market will also help you when you want to buy an apartment building. You may want to find out the type of investors that are putting their money in apartment buildings or how long such properties stay on the market. This knowledge will help you make an informed decision.
Find real estate agents that will offer you quality listings for apartment buildings for sale. Ensure that you are well-prepared before you can start buying properties. If you are a novice, ask your agent to provide a crash course in all you need to know.
(Buying an Apartment Complex Is Easier Than You Think, Fool.com)
(The Beginner’s Guide to Flipping Apartment Buildings, Retipster.com)