Apartment rentals are always in demand, especially as local property prices increase. When you have the opportunity to invest in an apartment rental, you can provide quality housing and earn a return on your investment. Here are some recommendations to consider when you are in the process of buying and investing in an apartment.

Choose the Apartment Type

There are many types of apartments that you can purchase as a rental investment. There are apartment buildings that are a fourplex with four units in the building, or you can look at buying a large older house that has been remodeled to make up four different apartment units on various floors from the basement to the attic. 

The type and size of the apartment building you buy are going to have an effect on the type of financing you can get and whether it is from a traditional mortgage lender or if you have to find it from private investors. Larger apartment buildings of many units are going to require you to get private financing, but if you are just starting out as an investor, you may want to look at a smaller apartment building, such as four units and under. You can even start out with a duplex and live in one unit while you manage and rent out the other unit to tenants. Then, when you are ready to buy your next apartment rental building, you can move into a unit in the building and rent out the second side of the duplex.

Complete Your Due Diligence

Before you buy an apartment building of any size, you should look over the documents that are related to the property and its existing rentals. The seller will be able to provide you with past tax returns on the property so you can look at the property's income and expenses and also give you an opportunity to look for any problems with the property. For example, if the owner has had a lot of evictions in the property or a major repair with mold remediation, you should look into it further before buying. The tax returns will show you if the apartment building has experienced a loss of income and how much. A profitable apartment will provide you enough income from rent to cover any vacancies and lost rent.

Then, always ask to see current lease contracts. This will provide you information on how long the existing tenants have on their leases and how much they are paying in rent. You will also be able to determine what units are vacant, then you should complete a walk-through inspection of the vacant units.

Talk to a real estate agent to learn more about apartment investing.