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Aparments good investment-School project?
Hello, I am working on a school project where your just won the lottery a 200 million dollars, after your lump sum and taxes it comes to a cool 50 million. Now invest it and or spend it. My plan is to invest my half 25 million dollars in 5 50 unit apartments. Which go for about 5 million dollars. I set aside 5 million for repairs upgrades. 1) My first question is it a good investment? 2) When I do research I get people selling them with operating income $205,XXX and a net operating income of $368,XXX. Is the net operating income my income? I assume I gotta pay tax on top of that? 3) Cap rate 8% what is that? 4) Will solar panels, low flow toilets, new windows aid in lowering the cost? Thank you in advice. Once again it’s a school project I didn’t win the lottery.
3 Answers
- glennLv 71 decade agoFavorite Answer
The right apartments could be a good investment. Like any other real estate a lot depends on location. If people will want to live at that location then you also want to provide them with great accommodations. Most apartments charge the renters the water and electric bills- so saving that stuff will not save you money- it may be attractive to potential renters- but most likely it will be expensive for you to maintain. I would stay with very proven and dependable products.
I would also not believe the figures the current owner gives for expenses or income, and if I had never owned an apartment before I would limit my investment in them at first to just one of those complexes at $5 million so that if something goes terribly wrong you will have plenty of money to work it out. diversify and put some in stock market and others in bonds along with your real estate idea.
- travelingblueeyeLv 41 decade ago
I would advise against your apartment investment. Each apt would cost you roughly 100k to buy and recouping that investment would be difficult in the most bullish market assuming you are selling the apartments instead of renting.. and renting incurs it's own costs.
Second, your net income from ANY investment is dependant on correlated operating costs... that's why they call it NET instead of GROSS. The rest of the math you really need to do yourself lest you FAIL the assignment. Hint: a cap rate is - most simply - annual costs of operation divided by the cost of acquiring said assets. It's a measure of money you need to set aside per year for a particular investment... which In this case and in my estimation, is a BAD investment.
EDITED:
What could work out for your project would be to buy up waterfront property; If you can leverage your imagined millions on purchases of high value property, you can make a few minimal investments to improve those properties and then you can sell them one by one for big money.
- ?Lv 45 years ago
one million. Harley Kristen two. Karsyn Emma (woman) three. Kaden Ryan (boy) four. Addison Logan five. Dayton James 6. Arden Henry (Arden is a wooded area in a Shakespeare play) 7. Alexia Lucy eight. Alexia Lucy nine. Alexander Benjamin
