There are two kinds of real estate: residential, which involves private, individually owned homes, and commercial real estate. People who invest in the second kind of real estate lease the space to businesses or to residents. Many landlords choose to purchase and rent out apartment buildings for the following reasons.
As people delay getting married and buying houses, they are more likely to choose nonpermanent housing such as apartments. Many people use apartments after they move out of their parents’ houses and before they buy their own homes. However, in cities, people often rent apartment spaces indefinitely. Landlords who invest in apartment buildings will not have problems meeting their goals for occupancy as long as the prices are fair and the location is safe and accessible.
The standard practice for apartment buildings’ rent is to collect the amount due at the end of every month. If they stipulate these terms in the rental contract, landlords are guaranteed payments on a monthly basis and can evict or fine tenants who do not adhere to the payment schedule. This steady influx of cash allows landlords to support themselves while also investing in other kinds of commercial real estate.
A stereotype about apartment dwellers is that they never stay anywhere for long. However, reality no longer matches this stereotype. The vast majority of people in apartments do not move every year, and while they are more likely to do so than people who own their houses, the percent of people who move is declining. Landlords can safely assume that renters will stay for at least a few years. They should be aware, though, that factors such as age, family status, the safety of the location and the quality of the building can increase a tenant’s likelihood to move.
With apartment buildings, the landlord retains much more control over the space than with office spaces or malls. Homes do not require the installation of equipment such as check-out lines and display cases, so when a tenant vacates, less work has to be done to make the same space available for a new client. Additionally, in the rental agreements, landlords can specify the kinds of renovations that tenants can complete. For example, tenants could be prevented from painting or hammering nails into the wall.
Commercial real estate is a constantly changing field. However, prospective landlords should consider investing in apartment buildings to increase their profit and economic stability.