Apartment complex - opinions

[Charles Hunnewell]

So an apartment complex has recently become available in an area I’m looking to invest in. The complex is made up of mainly 1 bed/1 bath studio style apartments. There are also commercial units below. What are others opinions on single room apartments? Drawbacks? Positives? Feel free to ask further questions and I will try my best to answer. Thank you!

[Bjorn Ahlblad]

@Charles Hunnewell My 2 bed units rent the best and stay occupied the longest. The 1 beds are a close second. I do not have any studios but I imagine they might turnover a bit more? Sounds like a good building all the same!

[Erik Hatch]

I think a good mix of 1 bed and 2 bed is best, with more weight on 2 bed. 

Where is the property located? Is it near a university etc?

[Michael Reilman]

Originally posted by @Charles Hunnewell:

So an apartment complex has recently become available in an area I’m looking to invest in. The complex is made up of mainly 1 bed/1 bath studio style apartments. There are also commercial units below. What are others opinions on single room apartments? Drawbacks? Positives? Feel free to ask further questions and I will try my best to answer. Thank you!

 What's the unit split/ratio? Also, the commercial units add an interesting element to this, and while I don't know much about I do understand that some commercial leases can be real money printers. So to me, it's a question on what % revenue are all these making up? I think studios are harder to fill, and 1 bed appeals to more potential tenants. I would expect the studios to make up 25% of the units in the dark? Also, that may not matter much on if it's a good investment or not depending on if all the commercial leases are filled and their duration. 

[Ronan Donnelly]

@Charles Hunnewell, with a bigger concentration of 1-bedroom and studios you may want to underwrite with more frequent turnover higher turnover costs. Good luck!

[Rick Martin]

@Charles Hunnewell Are you looking in Valdosta? There is a university there correct? 1 Br's and studios do great for students, but then you have to ask yourself if you want to be involved in student housing. Some specialize and do well at it, but the turnover is high. I have found turnover to be higher with studios, but if you are renting to students, you will have higher turnover anyway. Just make sure you can execute quick turns, and underwrite above average vacancy.

[Spencer Gray]

It can depend on the demographic make up of the area but studios usually have the highest $/sft while still being the cheapest monthly rent in the market. Since the studios are usually not as common as 1 and 2 bedroom apartments and some people are just trying to find the cheapest/value option available, there can be a big supply/demand difference.

Make sure to check with your lender to see if the % of income from the commercial units are enough to complicate financing.