How (and how much) you can earn on an Apartment House - what is it?

Apartment House, Property Management

Beginning investors and entrepreneurs often think that the success of a business or investment directly depends on the size of the starting capital. This is not always the case: there are strategies that allow you to start with minimal or no investment, have a monthly cash flow and get ownership of an object worth several million rubles, purchased with someone else’s money. We’ll talk about how to create a real estate business from scratch in this article.

Real estate investing: pros and cons

Investments in real estate are considered reliable, but not the most profitable. Their main advantages:

1. Real estate is a real, tangible object that has objective value: you can live in it. Most investors believe that over time their real estate will rise in price.
2. Real estate can be rented out and receive monthly passive income.

Disadvantages of investing in real estate:

1. Not all real estate and does not always increase in price. There are downturns in this market. Also, the potential for price growth depends on the liquidity of the object. You can buy an apartment (room, house) and sell it a few years later for the same price or even cheaper. Read the real estate price forecast for 2020.
2. If the property is idle, utility bills must be paid for it.
3. Difficulties with rent. Renting a home can be difficult. There may be problems with tenants.
4. Income from real estate is usually low and not entirely passive. Even in a good situation, the rental yield (the ratio of annual income to the cost of the property) is low and rarely exceeds 5%. A bank deposit brings approximately the same profitability. At the same time, problems with real estate still need to be resolved (looking for tenants, showing the apartment, making repairs).

If an apartment was inherited and it is “extra,” they usually leave it and rent it out in the hope that over time it will be worth more. You can do the same thing with a house, but it’s more difficult to rent it out and sell it. And buying investment property with a mortgage is not at all profitable: mortgage payments are almost always higher than the rental rate. The investor will not only have to make repairs, look for tenants and solve related problems, but also pay extra to the bank from his own pocket.

All of the above is true for traditional real estate investment schemes. They more or less work for liquid properties (small apartments), but do not bring high returns to the investor. The profitability of real estate investments increases significantly if you apply the investor approach.

How to create passive income in real estate

Creating high passive income on real estate is possible not only for those investors who already have several apartments in the city center. Assault investment strategies allow you to start from scratch or with minimal investment of personal capital. At the same time, the income from the investment property will be significantly higher than the market average. This can be considered both as a business (if you do it yourself) and as a passive investment (if you transfer the business to a management company). But at the first stage of launching the facility, the investor’s personal participation will be required for at least 3 months.

The most advanced strategy for making money in real estate is the apartment building strategy.

Business on apartment buildings

In the Russian Empire, apartment buildings were popular in the 19th century, but after the revolution they disappeared. The idea of ​​a modern apartment building is based on the principle of the famous investor Robert Kiyosaki: divide the big into the small and rent it out in parts.

The essence of the strategy: buy a suitable house with a mortgage, divide it into 5-15 studios and rent it out for long-term or daily rent. If everything is done correctly, tenant payments cover mortgage payments by an average of 2 times. As a result:

• the object is bought with someone else's money
• the loan is paid at the expense of the tenants
• the investor receives monthly passive income of 70,000 - 250,000 rubles
• the house increases in value over the years
• After the loan is repaid, the tenant receives all cash flow from the rental
• With an apartment building you can solve your own housing problem
• An apartment building can be sold as a working business

A standard scheme for making money on real estate allows you to get a maximum of 5-6% per annum from renting an apartment (usually 2-4%), and an apartment building gives a yield of 15-20%. If you rent out rooms on a daily basis, the cash flow can be even greater. This assault strategy allows you to increase profitability several times due to the advantages of an apartment building.

Watch the video on how to make an apartment building that will bring 500,000 rubles a month:

Removable question

In a rental house, unlike ordinary rental housing, people enter into an agreement not with an individual, but with an organization. In addition, only tenants live in the building - space is not for sale for permanent residence. As DOM.RF reported, such housing is in demand - the average annual occupancy rate of the first rental house commissioned in 2020 is about 98%.

In the neighborhood, you can rent a two-room apartment for 65 thousand rubles, but the housing in the rental house is business class, and nearby, on Kutuzovsky Prospekt, there are many expensive offices, so it will really be in demand. “But this house will not become a competitor to ordinary landlords,” says Maria Zhukova, managing director of MIEL-Arenda. “This will only force the owners around to make their apartments look more decent.” And it is unlikely that this format of housing will be in demand anywhere other than Moscow. “There may be such a project in St. Petersburg, but it will definitely not be of this size and scale,” Zhukova believes. “The rest of the million-plus cities probably simply won’t find a sufficient number of clients for projects of this scale and price category.”

Rental houses DOM.RF are the first steps in organizing civilized rentals in Russia, recalls Nadezhda Kosareva, head of the Housing Policy Commission of the Public Council under the Ministry of Construction, President of the Institute of Urban Economics Foundation. There is a categorical shortage of rental housing, especially in large cities, Kosareva believes. At the same time, it dominates in foreign cities; in Berlin its share reaches 80%. In Russia, on the contrary, 90% of housing is owned, while only 10 percent is rented out by private individuals, and even then on a semi-legal basis.

In European cities, rental housing predominates. In Russia, on the contrary, 90% of housing is owned and only 10% is rented semi-legally

It is not entirely correct, according to Kosareva, that the new rental house DOM.RF belongs to the apartment segment, that is, formally to non-residential buildings. “For residents in this case there is no particular difference, but the laws must still be observed,” the expert emphasizes. DOM.RF reported that of the company’s nine “rental” projects, only two have the status of apartments. “The law does not prohibit citizens from staying in apartments,” the company noted.

According to Kosareva, non-commercial rental housing needs to be more actively developed in Russia, and this can significantly reduce the severity of the housing problem. “In Western countries, in addition to market rent, there are semi-state non-market segments, when housing is rented on non-commercial terms, at lower rates. The state subsidizes this segment,” says the expert.

The institution of social rent (social rent houses non-privatized apartments) has many problems, Kosareva notes. “The budget built these apartments - and that’s it, I forgot about this money, it will never come back. If housing is privatized, this apartment is no longer public property, it must be built again for the next people, this housing stock will not be preserved,” the expert emphasizes. Therefore, in 2014, amendments were made to the Housing Code on a special type of housing - the so-called rental houses. They can be of two types - commercial use (roughly what DOM.RF does) and social use. Unlike apartments in social rent, the fee for non-commercial rent may include not only current expenses, but also partial compensation for the costs of building this housing. This may take several decades, but these funds can be used to build the next rental houses. “According to our calculations, for non-commercial rental, apartments in Moscow could be rented for 15-20 thousand rubles a month. This is almost 2-3 times cheaper than commercial rental,” notes the Institute of Urban Economics.

According to non-commercial rental, apartments in the metropolis could be rented for 15-20 thousand rubles

Since the price is lower than the market price, not everyone can rent housing in the non-commercial segment - access there is regulated by law and depends on the income of the potential tenant. As Kosareva explains, the maximum lease period is 10 years. If during this period the tenant purchased his home, the contract with him may be terminated. If, after 10 years, he does not have his own housing and he cannot rent an apartment at market prices, a contract is concluded with him for a new term for the same apartment. It is assumed that using this scheme, it will be easier for families who can save on rent to purchase their own housing. Perhaps there are shortcomings and some “pitfalls” in this system, but so far they are especially invisible - in the whole country there are only a dozen non-commercial rental houses that appeared several years ago. There is not one in Moscow, two in St. Petersburg, there are in Khanty-Mansiysk, Tyumen, and Perm.

As the press service of DOM.RF reported, the company is now studying the regions' needs for social rent. “The formation of a non-profit social rental fund in world practice is carried out by providing tax and other benefits for investors in the construction of rental housing or by subsidizing the rental rate to the market level from certain sources. To form a non-commercial hiring segment, it is necessary to provide appropriate tax incentive measures and sources of financing,” emphasizes DOM.RF.

Non-profit hiring without budgetary support does not exist at all. “Now the president has set a task for the government - to find mechanisms for providing families with low incomes with housing that will remain in public ownership and will not be privatized. Therefore, in the Ministry of Construction, in DOM.RF, experts are all preparing their proposals to present to the president and the government in order to discuss this topic and decide whether it is possible to allocate budget funds for this or not,” says Kosareva.

Investing in a home: advantages and disadvantages

Advantages of an apartment building for an investor:

• Cheap square meters to buy. The cost per square meter of a house is usually 2-3 lower than the cost per square meter of an apartment. This makes investing in a home profitable.
• Expensive rent. The cost of renting apartments and studios in an apartment building is the same as in a regular apartment building. It is most profitable to rent out small-sized studios. Even compared to one-room apartments, with long-term rental, the income from each square meter of a studio is 1.5-2 times higher.
• Large trade. You can get a discount of up to 20% on your home. Because houses are difficult to sell, their owners often make concessions.
• Monthly income from the second month. You can complete the redevelopment and move in the first residents in just a month and a half if you know the secrets of investor renovation.
• Possibility to start without investment. You can buy a house with someone else's (borrowed) money, and the cost of repairs can be included in the purchase price.
• Financial stability. There will be many studios in the house. Even if some tenants move out, the investor will not have to pay the mortgage out of his own money.
• No neighbors. No neighbors - no problems with them. Unlike apartment owners, homeowners can remodel as they please, move “wet spots,” etc. No one will complain about frequently changing tenants.
• There is a plot of land. A plot of land near the house provides additional benefits. Firstly, it creates the illusion of outdoor living for residents. There you can put a barbecue, chairs, an inflatable pool, etc. Secondly, the investor can build another building on the site (for example, a modular house) and also rent out studios there.

Disadvantages of an apartment building:

1. It’s difficult to take out a loan for 5-15 million rubles without a down payment. The difficulties here are both psychological (it can be difficult for people to decide on this, because many perceive a loan as “bondage” and do not understand the possibility of using leverage for an investor) and financial. If a loan is not given, there are different ways out: the services of a mortgage broker, correcting your credit history, urgent employment, attracting funds from investors, etc. As practice shows, with a strong desire, all problems can be solved.
2. This strategy does not work equally well in all regions. Before you buy an apartment building, you need to test demand and calculate the ratio of income and expenses. Practice shows that there are almost no cities where apartment buildings are unprofitable (usually these are very small cities with unclaimed and very cheap rent). In the vast majority of regions, the strategy works and generates income, but specific financial results may vary depending on the region.

The advantages of the apartment building strategy far outweigh the disadvantages.

Let's continue the rental topic, but only from a slightly different angle. We will talk about apartment buildings in the near Moscow region. The idea of ​​building apartment buildings on land for individual housing construction has been exciting the minds of many small entrepreneurs for several years now. Indeed, few people can resist the housing rush of the last three or four years. And then there is such a gift as an ever-extending dacha amnesty and a simplified procedure for the development of private households, which help reduce the cost and construction time of such objects in comparison with full-fledged housing developments. And in terms of quality for the final occupant, such a house is not inferior, and perhaps even superior. But there are practically no adequate legal schemes for the sale of apartments within cottages built on individual housing construction. And even the savings that may arise when purchasing apartments inside an apartment building do not compensate for the future risks of their owners.

Brief economics of the project

As a non-architect, what I see as ideal from an efficiency point of view is a two-entrance, three-story house with 4 apartments per floor in one entrance with an average area of ​​40-45 sq.m. Total, 24 apartments. I’m not describing a clear apartment layout here, it will depend on the location of the project, but obviously studio apartments and one-room apartments should prevail. Accordingly, the total area of ​​the building will be about 1000 sq.m.

Of course, you can scale up to a “cottage” of 1500 sq.m., since such projects also do not require an examination, but due savings “on scale” compared to 800-1000 sq.m. We won’t get an analogue here. Yes, and it will be more difficult to obtain adequate apartment planning without increasing the MOP.

The building area for such a cottage will be about 350 sq.m. Such a house can easily be “fitted” into a 10-acre plot. But it is better to focus on a plot of 15 acres, so that you can provide 1 parking space for each apartment.

A plot of land on the outskirts of the village, which is not the most marketable for cottage construction, can be found for 400-500 rubles. per hundred.

The construction of such a turnkey house with full furnishings will cost, say, 40 thousand rubles. for 1 sq.m. Swedish minimalism to help us! + 2.5 million rubles for site development and unforeseen expenses. Total, 50 million rubles. costs.

We calculate the income component based on the average net rental rate minus operation in the amount of 30 tr. for 1 apartment per month. Total - 720,000 rubles per month. 8.64 million rubles in year. with an investment of 50 million rubles. gives us a yield of 17.3%. Well, let’s say we made a mistake somewhere and didn’t take into account, for example, depreciation charges, real estate commission, and the yield will be about 15%, then that’s also not bad.

Where can I find a plot?

For the first time, when the idea of ​​an apartment building came to me, the idea was to find a plot in a guarded cottage community with infrastructure. Imagine, if such a house appeared, say, in Knyazhye Lake or Millennium Park, there would be a queue for apartments. But, of course, this is a utopia. For the owners of these villages, the management company and residents, such an apartment building will be like a “bone in the throat.” And the costs associated with the purchase and construction of such a facility will be significantly higher.

But a plot on the edge of a small village or unguarded cottage development would be an ideal solution. It is important to have a gas connection and sufficient electricity capacity. Convenient access and a minimum number of neighbors are also a priority. Distance - up to 30 km and proximity to a large settlement and railway station is desirable.

What to build from?

If we talk about the rental market, then client-tenants are not as scrupulous about the “insides” of their home than their colleagues, client-buyers. For them, appearance and functionality are more important. If they don’t like it, they’ll move to another apartment. That is why I consider frame construction technology ideal.

It reduces the construction time of a facility and is relatively cheaper (in total) compared to other technologies. And there will simply be no one to think about those shortcomings (most likely psychological) that are deeply ingrained in the minds of our fellow citizens.

Of course, you will need to more carefully address the issues of sound insulation, which is also completely solvable.

Which project to choose?

There are now ready-made projects of apartment buildings on the market up to 1000 sq.m. In particular, pay attention to the projects of the Novaya Izba company. But these projects are for brick and concrete construction. If we are talking about a frame option, then no one will design this house better than the manufacturer of frame houses and the future supplier for this project. This may even be included in the cost of construction, but if the customer wants to retain the rights to the project, then he will have to pay for it separately. And we must not forget that during the construction process, you also need to listen to marketers and draw up a clear technical specification in order to end up with a project optimized for the market with adequate apartment layout and functional internal layouts.

Is there demand?

It is clear that the market has now sunk even in this inexpensive segment, and over the next couple of years hundreds of rental apartments in new buildings near Moscow, bought during the rush of the currency rally, will enter the market. But who will find it easier to rent out their apartment? A private owner, one of thousands of landlords, or a semi-institutional player with a qualitatively different pool of offers? In my opinion, the answer is quite obvious. In addition, some part of the housing stock can be left for short-term rental. Of course, it poses more problems from a management point of view, but it can compensate for subsidence in demand.

Infrastructure and service

As an option to attract additional clients and justify higher rents, you can think of some minimum set of infrastructure. For example, use part of the site and organize gazebos, a small playground, and outdoor exercise equipment. If the site does not allow it, then it is quite possible to use the roof of the building, making it usable. We will also have to introduce rules of residence, which tenants sign along with the lease agreement.

You can also think about some common areas inside the house itself - a sauna, a billiard room, a gym, a home theater. Such infrastructure facilities will be able to provide the apartment building with long-term competitive advantages.

And, of course, we should not forget about additional services - apartment cleaning, food delivery, transfers to and from the city, installation of individual security alarms, etc.

Legal form

The most ideal option is an individual entrepreneur using the simplified tax system according to the 15% of profit system. If there are several participants, then this is an LLC on the same taxation system. All costs for the construction of the facility are borne by the legal entity. And for 5-6 years, these accumulated losses count towards future rental income. But we must not forget that you will have to pay 1% of turnover under this taxation system. Of course, there are accounting subtleties that need to be taken care of in advance and consulted with an experienced accountant. After all accumulated losses are over, you need to switch to a 6% system from turnover. Don't forget that this can only be done once a year.

If suddenly a possible sale of the entire complex looms before this moment, then before the transaction is completed it would also be advisable to switch to 6%.

I have not explored the option of obtaining a patent. But it also most likely has a right to exist.

We will suffer from gigantism

In this case, I described a model of a private apartment building built on one plot. But a larger plot of individual housing construction - 1-5 hectares - may well be suitable for this concept. In this case, it is no longer possible to do without an extensive infrastructure and a full-fledged management company. The profitability of a larger-scale project may fall slightly, but there will be additional opportunities for the management company to earn money, plus commercial components - retail space, cafes, car wash, etc.

If you are interested in this idea, I will be glad to assist you in any way in its implementation.

See also: Non-standard concept No. 1: Rental village

Where to start a business in apartment buildings

Business on apartment buildings begins with choosing an object. Two similar houses on neighboring streets can bring an investor completely different financial results, so you need to choose a property using a checklist.

What matters when choosing a home:

• Location. Typically, apartment buildings are aimed at young couples under the age of 35 who do not yet have their own home. Less often, apartment houses are rented by students aged 18-22 years. The apartment building must be located near their place of work or study.
• Transport accessibility. The proximity of the metro, public transport stops or railway stations is of great importance. From the house there should be convenient and quick access to any part of the city.
• District infrastructure. The presence of shops, pharmacies, forested areas, cafes, entertainment centers, clinics, kindergartens and schools is also important for tenants. Nobody wants to live in a “bear corner” where there is nowhere to buy groceries and nowhere to go in the evening.
• Area and layout of the house. The final number of studios depends on the area, and how easy it will be to “cut” the house depends on the layout.
• Technical characteristics of the house. They are difficult to check at the purchase stage: no one will let you break down the walls until the deal is finalized. But there are opportunities to check the condition of communications and other technical characteristics so that there are no unpleasant and expensive surprises at the repair stage.
• Land area. If there is a large plot near the house, this provides additional opportunities not only for a barbecue, but also to expand the house over time or build new studios on the plot.
• Price. The price should be adequate, but even in this case you need to bargain. Houses are difficult to sell and take a long time. If the owners urgently need money and/or they have not been able to sell this house for a long time, the opportunity to receive a large (up to 20% of the initial price) discount increases.

To avoid mistakes, make test rental advertisements before purchasing and measure the number of calls from potential tenants. We need to make sure that studios in the area will be in demand.

The most profitable way to share a house is in a studio. With the right approach, a studio with a good (not necessarily expensive) renovation can be rented out for the same price or even more than a one-room apartment. Division into studios increases the profitability of an investment project.

Creation of an apartment building according to a simplified scheme

As paradoxical as it may sound, a business on apartment buildings is a passive business and can be started without investment. What is an apartment building

? This is an apartment building that generates passive income. A simplified scheme for creating an apartment building looks like this: you will need to either build or buy a ready-made house and divide it into studio rooms, or redevelop it into apartments of a certain layout. Then rent them out for long-term or daily rent. Depending on local market conditions.

Although it will take more than a month to “promote” the business in order to recoup expenses and receive only profit. But if you use credit or mortgage funds wisely, you will not spend a penny on loan repayments. Plus stable profits with an increasing tendency. According to this scheme, the idea of ​​an apartment house is implemented in a short time and it starts working for you within a year, and after one to five years, when the loan for the house has already been repaid, the profit from the business increases significantly.

Such a project deserves attention, it is relevant and promising.

You can learn in detail and step-by-step about actually implemented business ideas for an apartment building by attending a free master class.

There is another way to create an apartment building using a simplified scheme: rent a ready-made building and earn money from subletting. The only difficulty is to agree with the owner of the building on the redevelopment of the premises. As practice shows, studio apartments (even small ones) are best rented, so you may need to re-equip the standard layouts.

As an example, let’s look at a standard and simple scheme for selling an apartment building. A building is purchased - an area of ​​150 square meters. m. (the nearest suburb of Moscow, no further than 20 km), at a cost of about 5 million rubles. If on credit, then the monthly payment to repay the loan is 60,000 rubles. Having redesigned the area for studio apartments of 15-18 square meters. meters (eight apartments), you receive 18 thousand rubles for rent each month. If you keep one apartment for yourself, then from renting out the rest, your monthly income is 126,000 rubles. Result: repayment of a bank loan and net income of 45,000 rubles monthly.

Apartment house project

The apartment building project includes:

1. financial plan with calculation of the break-even point of the project and the maximum amount of income taking into account all expenses,
2. plan for redevelopment of an ordinary private house into an apartment building with 5-20 isolated studios.

Watch the video on how to buy an apartment house without investing your own funds:

The project of this apartment building includes inflating the price of the property, which allowed the investor to cover the down payment and the cost of repairs. The investor plans to receive 200,000 rubles in net profit from the house.

Standard business plan for the construction of an apartment building

When drawing up a business project “Apartment House”, the following important factors are taken into account that will influence the success of its implementation:

• hotel concept with a clear definition of clientele;
• location and research of the hotel services market of a given area (region);
• design of the building and rooms , area and layout (based on purpose), availability of amenities;
• the possibility of equipping with equipment and the presence of modern means of communication, the availability of access roads and catering establishments;
• ways to provide additional services;
• sales channels for hotel services.

And, of course, the main and main part of the business plan will be the financial costs of calculations for the implementation of the project.

Approximate minimum calculations are:

• registration of an enterprise , permitting documentation - from 150 thousand rubles;
• cost of land - from 1.5 million rubles;
• construction of a house - from 2 million;
• infrastructure and communications with documents - from 300 thousand rubles;
• design, equipment, furniture, etc. - from 900 thousand rubles;
• other current expenses - about 120 thousand rubles.

The minimum starting capital for the implementation of the commercial project under consideration is almost 5 million rubles.

Prices vary significantly across regions. In Moscow or a prestigious suburb, the cost of some items increases significantly.

How to calculate project profitability

The profitability of an apartment building project is the difference between the rental income of all studios and all expenses (mortgage payments, taxes, management company and maid services, utility bills)

Example. The apartment building is divided into 15 studios, each of which is rented out for long-term rent for 20,000 rubles. When fully occupied, the cash flow will be 300,000 rubles per month.

Expenses:

Mortgage payments - 120,000 rubles, Maid services for common areas - 10,000 rubles Taxes (under patent) - 10,000 rubles Utility payments - 0 (utility payments are paid by tenants)

The owner rents out the house himself and does not use the services of a management company.

Net cash flow per month = 300,000 - (120,000+10,000 +10,000) = 160,000 rubles.

When calculating profitability, it is important to determine the break-even point when income covers the monthly mortgage payment. In this example, the break-even point is 120,000 rubles and corresponds to the rental price of 6 studios.

To increase profitability, you can rent out studios (or part of studios) on a daily basis. Cash flow when fully occupied will be 3-4 times higher. But such a strategy requires investor participation.

And not only from AHML

If the project is successful, you can expect the following:

• AHML will enter the market with other projects;
• Developers will begin to seriously consider the construction and operation of apartment buildings as an independent business;
• In the context of a liquidity crisis in the market - a huge number of apartments remain unsold as of the summer of 2020 - many new building projects will be turned into apartment buildings.
• Unsold new buildings pledged to banks for loans can be transferred by bank subsidiaries into apartment buildings.

Consequences of the mass launch of apartment building projects:

• Tenants will receive new opportunities, most likely with household ones;

• Private Landlords will face new and strong competition.

Let's take a closer look at the situation...

Private owner or apartment building?

Let's try to make a choice from the point of view of a potential tenant and compare the options.

We deliberately did not compare prices, but we can assume: the cost of rent in apartment buildings will be market price in the sense that it will be focused on their optimal occupancy. And their very appearance increases supply on the market. As can be seen from the comparison, almost the only advantage for a private owner is his willingness to accommodate the tenant (including “lowering the price”) and location. Previously, the press reported a price of 1,300 rubles per 1 sq.m. per month (or 39 thousand for an apartment/studio with an area of ​​30 square meters, which is on average 10-15% higher than the market).

Actual rental cost in the Liner complex:

• Studios - from 40,000 rubles per month;
• Two-room apartments - from 59,500 rubles per month;
• Three-room apartments - from 82,000 rubles per month

Consequences for the expensive segment (from 100 thousand):

• Minimal consequences for exclusive and very expensive housing
• Strong competition from apartment buildings in the areas where they are located: primarily for rentals paid for by employer companies and for apartments rented to foreigners from the “middle class”. According to some data, the share of rentals at the expense of employing companies amounted to 11-12% of all rented objects in 2020, and before the crisis in 2013 it was up to 18%.
• Standard conditions in the rental market - “registration of tenants” and a legal, transparent contract will become a necessary condition.

Consequences for the middle segment (30 – 100 thousand):

• Very strong competition from apartment buildings in the areas where they are located
• Standard conditions on the rental market - without “registration of residents” and relatively “fresh renovation”, it will be difficult to rent out an apartment in this segment. You will have to do serious repairs in the apartment quite regularly
• It is necessary to focus on clients who are interested “in a specific location”, to promote the apartment taking this into account (from the description to the promotion of the apartment through those working in nearby business centers and enterprises)

Consequences for the low-cost segment (up to 30 thousand):

• Increased competition from apartments that were previously “in the middle segment”
• The cost of renting apartments without renovation, in inconvenient areas and with poor surroundings may continue to fall and approach 2-3 times the amount of utility bills

Home renovation cost

In order for an investment in an apartment building to be profitable, it is necessary to carry out redevelopment (divide the house into a studio) and investor repairs. Such renovations involve the necessary minimum of actions and costs: at the same time, the studios look new, are fully equipped for a comfortable life and are attractive to potential tenants.

There is a lot of illiquid housing on the rental market. People are trying to make money on old apartments without investing in renovations: broken tiles in the bathroom, plaster crumbling from the ceiling and “grandmother’s furniture” are the norm for rental apartments. According to realtors, 10% of such apartments are generally unsuitable for living. Fresh renovations and new equipment significantly increase the attractiveness of an apartment for residents: they are willing to pay more for such housing. But a “fresh” renovation will not necessarily be expensive, and new furniture can be bought at Ikea or other budget stores. This way, the investor can get high rents with minimal costs.

The cost of remodeling and repairs depends on the area of ​​the house, the materials used, the region, the state of communications and other factors. It can be difficult for novice investors to make cheap repairs: they are not price-conscious and usually agree to offers from construction companies, although the prices there can be inflated. For a house of approximately 300 sq. meters, you can estimate a repair amount of 2 - 3 million rubles or more, including the cost of furniture. These costs can be factored into the cost of purchasing a home.

Usually investors make simple, similar studios in the minimalist style, but there is another approach. Watch a video about an apartment building in Marusino:

The house is divided into 22 studios, each of which is unique. This allows owners to receive 180,000 rubles of net profit per month.

Director of the State Autonomous Institution “Technopark in the field of high technologies “IT Park” Anton Grachev answers:

I work in the IT park of Naberezhnye Chelny (Republic of Tatarstan). This is a government organization that helps companies in the information technology sector develop. People come to work with us from different regions of Russia and stay for quite a long time. Therefore, there was a need to provide housing for nonresident workers.

In September 2013, our company approached the leadership of the Republic of Tatarstan with a proposal to build a rental house for out-of-town employees of the IT park. We were supported in this matter, and construction began on a two-entrance ten-story building designed for 118 apartments.

Already on September 1, 2014, the first residents moved in.

The house officially belongs to the State Housing Fund of the Republic of Tatarstan (hereinafter referred to as the State Housing Fund) and was built specifically for us. Non-resident employees of our company rent apartments there. The rental price is 30% lower than market prices. So, a one-room apartment can be rented for 7 thousand rubles (in our city, on average, you can rent it for 10-11 thousand). A two-room apartment costs 9 thousand rubles (in the city - 15-17 thousand). Moreover, all apartments are fully furnished: there are all necessary household appliances, everything is in new condition. Payment for housing and communal services is carried out solely on the basis of consumed resources: meters automatically transmit data to the management company.

And one of the features of our IT house (that’s what we call it) is that access to the apartments is provided only by fingerprints, that is, the residents don’t even have keys. There is security, video surveillance - the territory is fenced.

I can’t say whether this is beneficial from an investor’s point of view. This question should be addressed to the State Housing Fund, which is the owner of the house.

But for us, the company for which the house was built, this is a very profitable and convenient option. Firstly, the price. Secondly, this is a new and modern house next to the work itself. Thirdly, neighbors are your colleagues. Today, all apartments in the IT building are occupied by our employees (people who do not work in the IT park cannot get apartments in this building).

5 main answers for those who want to buy an apartment

What infrastructure should be in a residential complex?

How to get a stable cash flow

In order for the cash flow from an apartment building to be stable, it is necessary to ensure maximum occupancy of the studios. If the object is chosen correctly, there should be no difficulties with residents. Investors conduct a strict casting among those wishing to rent studios and often only accommodate people of the same age category in order to avoid problems between neighbors.

If the investor has chosen a daily rental strategy, the potential profitability of the house is higher, but in this case it is necessary to constantly advertise, show studios, and rent them out again and again. This option is suitable for businessmen, not passive investors.

Apartment building against the backdrop of housing and communal services reform

The reason for the failure of the housing and communal services reform can be considered the lack of highly efficient housing. In the absence of apartment buildings that could serve as a locomotive, a condominium (HOA) is considered a progressive option. As foreign experience shows, this type of housing has proven to be ineffective.

A significant proportion of real owners strive to become owners of individual houses that are quite effective in management. Managing a condominium is a challenging task that few buyers can undertake. In Europe, the number of such houses is being reduced - many residents are by nature tenants, not owners, and there is nothing reprehensible in this - the same Professor Preobrazhensky was an obvious tenant, indignant about stolen galoshes and the lack of order in the house.

An apartment building generates passive income

The main advantage of the income house strategy is that it provides the opportunity to receive income in passive mode. For an investor, an income house is a fireproof pension that can be obtained with zero investments.

Watch the video of Yuri Medushenko, a professional investor in apartment buildings and author of the book “Apartment House in Russian”

If you want to know even more details on how to buy a house without money, make repairs quickly and without overpayment, move in tenants and get passive income, download a free book from the No. 1 expert on apartment buildings in Russia.

Apartment buildings in Russia - today's realities

Real estate experts and officials have identified several reasons for the shortage of apartment buildings today. The assessments do not indicate the main factors:

• The level of corruption among officials and the construction industry as a whole (family and friendly ties between the heads of construction companies and municipal authorities), when everyone is aimed at quickly obtaining excess profits through the construction of condominiums. But investing in apartment buildings is not such a fast and profitable business (the average payback period is 10 years).
• Stimulation by the authorities of the construction of housing for sale by artificially inflating demand. The construction of social housing also reduces the demand for real estate, resulting in a deteriorating housing stock.
• Violation of logic in socio-economic policy. In fact, the majority of Russians belong to the category of low-income people, for whom mortgages are not available, although theoretically only obvious beggars are considered poor. Instead of constructing social housing for this category (as in other countries) or compensating rent (at least partially) in the same apartment buildings, the state provides financial assistance to insolvent citizens for the purchase of housing or a mortgage. The policy of cash handouts stimulates price increases; subsidies for home buyers lead to a decrease in purchasing power among other categories of citizens, while simultaneously driving into bondage citizens tempted by government support who are already experiencing financial difficulties.
• Real estate shortage. The average resident of Russia has much less living space than a resident abroad. Artificially inflating the demand for real estate does not contribute to the growth of apartment buildings, as a less profitable “niche”.