What is the impact of a large apartment complex?

[Michael Wang]

Hey guys,  based on your experience, what is the impact of a large apartment complex to the local rental market?

There is a new construction in my area of 200 apartments that will be completed in a few months. They will be leased out at the top range of my local rental market. The positive camp of my local investors are telling me it is going to transform the area because more people more business moving in will raise the house prices and rents, while the negative camp is saying that the complex will draw all the quality renters in my area so the house prices and rents will actually go down.

If you have come across something similar before, please can you comment what was the impact?

[Jessica Zolotorofe]

Depends on rental rates and amenities. If they are very expensive, people want to be nearby but can't afford to live in the buildings so they still rent homes. Larger families, same idea. Long term, rental buildings are great for single family home pricing. People rent, fall in love with the area, and want to purchase their first homes there. With 200 units, at least a portion of those will want to buy in the next 5 years.If the area really builds up as a result of increased residential units, you will have a good investment on your hands. 

Depending on the town/city, the only concern really with increased residential rentals is the wear on infrastructure. Train systems, roads, parking, etc. That being said, a large developer may have to update or put some money toward roads and traffic safety in order to get approvals. Lots of variables, but other than rental rates if your home is the same size, condition, location and price range as the apartments, I think you'll do just fine.