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Building Apartment Houses In An Expensive Neighborhood

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When a real estate investor goes into an expensive estate or neighborhood to build apartments/ flats, they need to consider the rental rates. Lands are very expensive in some estates or neighborhoods and would make sense when single-family homes/duplexes are built for rentals or sale. This is because a small land size can be used to achieve this goal.

When constructing blocks of flats for rental purposes, ensure that all the flats have considerable parking lots for their cars as per government regulations. For example, a block of four numbers of one bedroom flat needs to have at least four parking lots. This means one parking lot for each flat. While four numbers of three bedroom flat need 4 to 8 parking lots. In other to achieve this, a sizeable land will be required. The size and cost of the land will make total expenditure very high, especially if the land is in a choice neighborhood or estate. This means the investor will get his investment back in 18 to 20 years.

However, when the same parcel of land is bought and built in a low to medium-cost estate or neighborhood, the investor can get the total expenditure back in less than 13 years. The difference between these neighborhoods is just the land since the cost of erecting the building is almost the same. In some neighborhoods, lands cost can be about 2 to 4 times higher in price, but the rental rates are not commensurate with the difference in the land cost.

If a duplex/single-family home is built in an expensive estate, you will be able to make use of a smaller size of land and have an adequate setback for at least 2 cars. In this way, lands will be utilized adequately for better rental returns on investment.

Investing in real estate rentals must be strategically planned for better returns on investments. A quick calculation will reveal which neighborhood to buy land in and which kind of house to build ( apartments, terraces, or duplexes). I will advise doing the math to ensure you can get back your investment for a maximum of 15 years. Buying cheaper land in a good neighborhood close to basic infrastructures such as schools, hospitals, shopping malls, etc might help you achieve this goal.  

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