08 Feb Investing in a mid-size apartment building
Investing in a mid-size apartment building
A mid-size apartment building will have 10 or less units. A typical mid-size apartment building in Hamilton can be built in 1920’s-30’s with wood floors or in 60’s and 70’s with terrazzo (cement) floors.
Location again is key. Central Hamilton, Durand and Kirkendall are good bets. Barton Street is a long hold. Hamilton Mountain(click for East Mountain/West Mountain info) has some nice mid-century buildings in great condition and full of solid tenants.
Once again, like all investments, you are buying a business and it must be viable from day one. The calculation is pretty straightforward;
Value =Net Income /Rate of Return x 100
I’ve used a five percent ROI and that is basically to be expected in Hamilton (maybe up to 7% tops). Price per door is anywhere from 130K- in an older building, to upwards of 160K per unit for a mid-century building.
You can hire a superintendent, a manager, DIY-it or have a tenant manage with compensation or free apartment. Financing gets tougher, you need a minimum 20% down payment to get in.