When investing in rental properties of any kind, often comes the question of how to buy a rental property. And, even though when buying a rental property, real estate investors should follow some of the same general guidelines, it is always beneficial to know how to properly purchase the specific type of property you are interested in.
For this very reason, this blog will focus on buying a studio apartment. Moreover, we will take an in-depth look into studio apartments for sale and will answer the main question of how to buy a studio apartment.
#1 What Is a Studio Apartment?
Studio apartments for sale are a type of real estate investment property that currently fall into the category of some of the best income producing assets.
Studio apartments for sale are not to be confused with one-bedroom apartments for sale. One-bedroom apartments are a living space with a separated bedroom unit. However, studio apartments for sale are a single unit of living space that contains all the different living areas. This means that they include a kitchen box, a sleeping area as well as a living room area within the same unit. Such investments also include a private bathroom. Some might even include a little storage area. The size of such investment properties is typically between 350 and 500 square feet.
Needless to say, as with every other type of investment properties, studio apartments for sale come with some advantages and disadvantages. In order to make an informed decision and answer the question: “Should I buy a studio apartment?”, we will review these pros and cons in the next section.
Related: Should You Invest in Studio Apartments for Sale?
#2 Should I Buy a Studio Apartment?
Before learning how to buy a studio apartment, it is important to understand if this type of income property is the right fit for you and your rental business. Owning and managing studio apartments for rent is not a simple task which is why we present you with the potential benefits as well as obstacles you might face along the way.
Pros of Investing in Studio Apartments for Sale
Certainly, there are some benefits that come with buying studio apartments for sale. For instance, these investment properties are cheaper due to their size. Additionally, this means that you might be able to afford to buy in a pricier location such as the center of a metropolitan city in order to lower vacancy rates and boost rental income.
Another great plus is the fact that there is a growing demand from tenants for these income properties. This is due to several factors. First of all, studio apartments are usually in primary and convenient locations. Even though small, they offer privacy and are a great first home for newlyweds, university students, junior employees, etc. Growing demand can mean high occupancy rates and positive cash flow.
Cons of Investing in Studio Apartments for Sale
Of course, there are some disadvantages when it comes to studio apartments for sale. As you can imagine, you are not the only one looking to buy a studio apartment. Other real estate investors are aware of the benefits of owning apartments of this kind and are actively investing in them as well. This means that you might face some major competition during the purchase process of the property. You have to take this into consideration when learning how to buy a studio apartment.
Another thing worth mentioning is the utilization of space. You need to make sure the areas are divided in such a way that living in a studio does not seem like a burden to your potential tenants. This might be an obstacle as you search for the right investment property. However, if you do your research and put effort into the process, you should be able to find a rental property that will attract tenants and allow them to live comfortably.
Related: Investing in Studio Apartments: The Pros and the Cons
#3 How to Buy a Studio Apartment
When learning how to buy a studio apartment, some of the general rules of investing in rental properties apply along with a few unique aspects.
Sort Out Your Investment Property Financing
You need to sort out your investment property financing beforehand. You can do so by researching median prices for such properties in your area of choice. This way you can roughly estimate how much money you need to prepare for the property, the closing costs, etc.
Additionally, due to the high demand from real estate investors interested in studio apartments, it is a huge advantage to be able to offer cash or direct payment to the seller. This way you can ensure you get one of the best income producing assets.
Select the Best Location for Investing in a Studio Apartment
You should start by researching the US housing market 2019 to find the best locations. Some real estate investors consider the “invest in a studio apartment for sale near me” strategy to be the best. Others, prefer to invest in another state. Regardless, make sure that the location of your choice is suitable for investing in studio apartments for rent. For example, make sure that there are young people (students or workers) in the area.
Once you choose a city, Mashvisor’s heatmap tool can help you in finding the best neighborhoods to invest in. The tool will provide you with all the necessary data you need in no time. So make sure to check it out!
Related: Finding Income Properties Using a Heatmap
Learn What to Look for When Buying a Studio Apartment
When you have decided to buy a studio apartment, there is a specific set of criteria you need to look for if you want to make money from your investment. For instance, you need to ensure that there is enough natural light coming in the unit as this would make it feel spacious and welcoming. Additionally, vertical space should be wisely incorporated in the layout of the studio. Be careful to invest in a property with plenty of vertical space. This will give your tenants the option to have a place to store their things. For example, they will be able to attach the TV on the ceiling rather than having an entertainment unit.
Last but not least, you should invest in good and full-size appliances if you wish to rent out a furnished property. Just because tenants choose to live in a smaller place, that does not mean they are willing to give up on cooking a proper dinner or having a proper place to do laundry. So make sure you provide tenants with the necessary equipment.
The Bottom Line
When learning how to buy a studio apartment, make sure you know what you are getting yourself into. Conduct proper research and check the criteria that apply when buying this type of real estate investment property. With the help of the right tools, you will be able to find the best and most profitable studio apartments for sale.
Ready to buy a studio apartment? Start your search here.