Apartments and Development

When initially meeting with Buyers, I always ask the question “Why are you inclined to apartments?” The response is usually “People will always need a place to live. Always.” While I do appreciate that thought process, many investors have not considered how new development will affect both their vacancy rates or overall sale price. As a licensed professional, it is my responsibility to advise the client on all these considerations. How many units are planned to be added into our region this calendar year? Are those units going to be direct competition for this specific building? Has the region had growth in the population? Is the growth attributed to short term projects or temporary housing? Does this building accept social service payments, such as DSS or Section 8, and will the new development? Will this building be able to charge the same rents if there are any changes to the DSS or Section 8 programs is always a key consideration. While apartments are valued based on income and expenses, all these factors must come into consideration for an exit strategy. It is crucial for any investor to profit during ownership and on the sale.