In North Dallas is some prime real estate for people that need offices, apartments, and warehousing for business. The apartments in North Dallas area can be some of the most profitable of the latter. Also, it can have some upsides and downside alike. We will first take a look at the positive aspects of the apartment business and then compare that to the negative outlook of running this type of business.
The income alone of owning apartments is very attractive. Even if you purchase a small complex of 8 units, this can have monthly income of $5000 or more. The cost would be around $60,000 a year. If your loan was $240,000 for the apartment and it was to be paid back in 10 years, then you’re looking at a payment of $2000 a month. This loan amount would include interest and fees, of course. The key would be to have enough credit, bank relation, and low-interest rates. An extra investor or person who could invest with you could make a good option as well. In this type of market its buy low and rent high or at least affordable.
If you plan on living in a unit and be an on-site owner/manager, I would advise against this until the loan is paid back. You will be taking income from yourself by, not renting it out. The goal should be to pay this loan as fast as possible. How do you know if you can keep the other seven units rented? You could be on the street with a huge loan to pay back. After the loan is paid off than living in an available unit could be a good option. If you’re sure that making the payment is no problem then living in a group could have some advantages. You will know if the people are making loud noise and breaking things that you might have to repair. You can provide speedy maintenance if you plan to do that yourself. Your tenants can pay for on-site if you decide to collect money from your apartment.
Now there are some downsides to all of this as well, as we begin to talk about them. You will have repair costs that can be very hard to predict or just flat out impossible to foresee. Renting to the wrong kind of people can leave your apartments a total wreck. Yeah, you have their deposit but $500-$600 won’t cover damage if in the thousands. Getting lawyers and courts to collect on damages can get costly, and you might not get the full amount of the repair cost either. It can be time consuming in courts. Let’s face it they don’t move fast. Let’s not forget about the slight possible acts of God that can occur that most insurance won’t cover.
Sometimes they do, or you can get a custom policy that can include tornados and disasters, but this will jack up the insurance cost a lot. Heavy winds can damage windows, tear off siding, and rip pieces of the roof off. You also have to keep liability down to a minimum. Lots of people overlook this one. Make sure there aren’t dangerous situations that someone could fall, break a bone, or flat out get hurt from. You don’t need a lawsuit from something that you could have avoided from happening. Courts will look at it this way also. If you could have done something to prevent an accident on your property, then you’re liable. It could be something as filling in a hole in the ground with dirt. Check your whole ownership and make sure you remove anything that can cause some form of danger to people.