Apartment Rentals

Renting apartments in order to profit from the property appreciation is still considered commercial real estate investing even though the apartments themselves are looked at as residential. Any time you invest in property strictly to make money, it can be construed as a commercial venture.

Sometimes individuals buy condominiums or townhouses and are able to secure a rental party for the unit. Before purchasing a condominium for rental you should make sure that the bylaws do not prohibit rentals to third parties. Make sure that the association does not prohibit renters.

One of the problems associated with commercial real estate investing of this type is finding qualified renters who are conscientious about paying their rent in a timely manner. It might take a very long time to evict somebody who hasn't been paying and they might cause damage to the property out of revenge. It's a good idea to require that your renter should pay you the equivalent of a month's rent as a security deposit.

Another negative aspect about this type of commercial real estate investment is that renters do not necessarily take care of property as they would if they owned the property. It if quite likely that some repairs will need to be completed once they have moved out. There are times when renters will vacate an apartment leaving it in quite the mess. These require significant clean up.

You have to know how to do basic repair work on a building in order to make this type of commercial real estate investment work for you. If one of your renters is handy, you may want to offer him a discount on his monthly rental payment in exchange for his services as building custodian.

Choosing to live on your rental property gives you the advantage of being able to oversee your tenants. It is far more cost-effective for you to take care of any necessary repairs yourself. The rent the others pay may even cover the mortgage of the property, leaving you living rent free and still owning the real estate. If you are able to remain in the building for a long amount of time, you might actually pay it off and, if it's in a good location, you may earn large equity on this kind of commercial real estate investment.

Not everyone is suited for apartment rentals. You have to like to work with people and it is helpful to know how to do basic maintenance.

Basic maintenance includes fixing leaks, plumbing problems and even some electrical problems. For larger and more severe issues, you may have to hire a professional. Getting a complete property evaluation is very critical to the decision making process when purchasing this type of real estate.

Something else that is very helpful when dealing with apartment rentals is performing credit checks for each potential renter. You will want to make sure that your renter pays you each month, otherwise you will have to initiate eviction proceedings through your attorney.

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By: CannFong

Ken Fong The Real Estate Scoop More on Property Management Fees

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