No matter what strategy you favor in real estate investing, the purpose of investing is to create a favorable return, or let’s say to maximize our ROI. Why invest in anything especially real estate if you are not creating a good return but most of us investors including myself forget the other equation with the ROI, our TIME.
I came across this great article by real estate investor Brian Kline, 8 reason to invest in multifamily apartments on Realty BIZ.
This article explains eight top reasons you want to make an apartment building your real estate investment of choice.
A Passive Investment
1. Typically, you buy multifamily apartment buildings with what is known as a “non-recourse loan”. This means the loan is only secured by the real estate investment and fully depends on the property income to repay the loan. Your personal credit is not at risk.
2. Apartment buildings are best managed by property management professionals. You collect the profits while others perform the day-to-day work.
3. Cash flow is the name of the game with any commercial real estate. Having 40 or 50 paying tenants under a single roof generates 40 or 50 times the cash flow compared to single-family houses. Apartments are specifically intended to be income-producing properties.
4. No need to panic when a single tenant moves out of your building. Unlike a single-family house, when you have multiple income streams from a single property, the loss of one tenant doesn’t mean you have to personally make the monthly mortgage payment.
5. Better use of your time or the time of your property management professional. It’s easy to see how much more efficient time management is when you maintain a single property for 40 or 50 families as compared to running around town maintaining 40 or 50 single-family houses.
A Real Estate Investment With Less Competition
6. Only a few investors know how to do it right. When it comes to a real estate investment, most people are afraid of owning multifamily properties. They lack both the required mindset and easy to acquire specialized knowledge. That fear means less competition.
7. The value of commercial real estate is based on the income it produces (not comparable values as with single-family homes). The opportunity here is buying a poorly managed property at a bargain price and turning it around to become a top income producing asset worth much more than the original purchase price.
8. Maximize your selling price by converting to condominiums. This is a highly profitable strategy used by few when it comes time to sell an apartment building. You earn more by asking top price from 50 condominium buyers than from a single apartment building buyer. Buying a multifamily apartment building is your ticket to wealth through low risk multiple income streams producing a great return for your investment. You will be hard pressed finding a better income generating real estate investment.
If you have been looking at real estate investing, you have 8 great reasons to do it in apartments or even just simple 4 units buildings but always remember reason number 5 (really it should be number one in your mind), always calculate the TIME factor.
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