Five Best Reasons Why Apartment Investing Makes Sense

Many single family real estate investors consider apartment building investing to be overly complicated and competitive. Thus they never realize the fortunes that can be made by applying sound investment strategies to larger properties. I will discuss five of the most prominent reasons that apartments should not be overlooked as part of a real estate portfolio.

Reason 1: More units equals higher income potential. Just due to the nature of apartment buildings your monthly income from one successful transaction is bound to be much higher than that of a single family house. Plus, you have the advantage of multiple tenants paying rent to cover any vacancies that occur so that the financial impact is not nearly as hard when someone leaves or gets evicted.

Reason 2: Less competition. The same irrational fear of larger numbers that keeps some investors away from apartment buildings also gives the advantage to the investors who do seek the knowledge and take action in this market. It keeps the lower-level investors away from bidding on deals.

Reason 3: Less owner management. The ability to afford professional management companies is a great advantage of commercial or multifamily real estate. Because the margins are higher, it is often possible to hire companies that can take a majority of the day-to-day responsibilities away from the owner.

Reason 4: Lenders are more sophisticated and can keep you from making poor decisions. Because commercial lenders have more to lose if a deal goes bad, their loan officers are much more adept at determining whether a property will perform or not than they are in the single family world of investing. This is like having another team member to make sure you do not overlook any obvious mistakes.

Reason 5. Higher "return on energy." Although it is not 10 times more difficult to purchase an apartment building, the returns can often be 10 times greater (or more) than single family homes. 25% equity of a $100,000 house is only $25,000. That same equity in a $1 million apartment building is $250,000. The "return on energy" is much higher in apartment buildings.

With all of these great reasons to invest in a proven commodity, what are you waiting for? You simply need a few tools and a new basic knowledge base and there's nothing holding you back from there.