 Apartment Investment |  |
My personal favorite investment vehicle of all the types of real estate is an apartment investment. I could easily list a hundred reasons why multi-family, or apartments are better than many other investments available - but thought I'd share my Top 5 reasons why you should look at apartments as part of your investment portfolio.
1. Cash Flow
Just like commercial real estate properties, such as offices or retail space, you are basically buying an income stream when you're looking at a multi-family property... You're looking for a return on your investment monies, and to return your original investment as quickly as possible. With apartments, you're getting one of the most stable and predictable cash flows of all the real estate types - more on this later.
But suffice to say, you're going to encounter less problems with vacancy in an apartment property because the units fill quicker. With a retail space, you may be sitting on a vacant unit for many months before the next tenant moves in. With apartments, this is much less likely!
2. Control
I've been over this before, as well - but when you own your own piece of real estate, you are in direct control of your investment. You're in control of who is managing the building and how they're managing the building, as well as controlling expenses, and making sure rents are at the appropriate levels. All of these are key to success in multi-family investment properties, and you're in control - unlike your stock or mutual fund portfolio.
3. Appreciation
While I don't purchase property based on appreciation alone - you can cash in on this by asking yourself, "Will this building be easy to sell in 10-15 years down the road?" It doesn't take a whole lot of market research to answer this question, and if you can bet that the apartment property is located in an appreciating area with ameneties that will be around in 10-15 years, you have passed the appreciation check box, my friend. It's that simple.
4. Leverage
When you invest in an apartment building you typically can get a loan for, say 10 or 20 percent down payment. The bank puts up the rest of the money. So let's compare stocks real quickly with real estate. If you invest $10K in stocks, and the stocks increase by 10%, your investment has increased $1K. Not bad. But... with real estate, if you invest the same $10K in a $100K building, and the building increases 10% in value...you're capitalizing on an increase on the $100K - not the $10K. So your investment has gone up in value by $10K, or a 100% increase of your investment! How cool is that vs. the stock market?
Your banker puts up 90% or maybe even 80% of the investment, but YOU get 100% of the appreciation - not the 10 or 20% that you put down. Ah, the beauty of apartment investing...
5. Stability and Predictability
I went over this a little bit earlier, but with an apartment building, you're going to have much quicker turnover of vacant units than any other class of real estate, including retail, office, or warehouses. Folks always need a place to live, and if you're buying in a good area, and the property is managed well, you will have no problem getting things rented to the next resident.
That's why I love investing in apartment properties, and I think that you should highly consider it as an option in your portfolio. Even for beginning investors, multi-family is much easier to grasp than an office or retail property because most of us have rented at one time or another in our lives. And even if not, we can all relate and understand multi-family concepts quickly and easily when following the right system.
Take a look at apartment investing for your next purchase and you can thank me later! Best -
If you want to see more - check out my video on an Apartment Investment and it's advantages on the link at the bottom of this page.