The Sweet Spot in Choosing an Apartment for Investment

by Ernesto R. Martin

As mentioned, I've found that apartments/condos somewhere in the $200,000 to $250,000 range is the sweet spot for good returns without excessive hassles. Choose a cheaper unit, like $100,000, and while there may seem to be a bit more income, the advantage fades when you consider other factors: the properties (and their tenants) have greater delinquency, more frequent need of repairs, and greater turn-over -- things I try to eliminate -- but perhaps more importantly, these units are typically in neighborhoods with much less appreciation. At the other extreme, units over $500,000 tend to have lower net income; althought they can be rented for more money, the condo maintenance fees and property taxes are disproportionally higher. In a moment we'll see the need for a healthy net income stream to pay the mortgage.