Too many investors hold the false belief that investing in real estate is no longer a wise use of their funds. Multifamily housing can, in fact, be a great addition to a portfolio of investments. Many families are being forced out of their single-family homes during these difficult economic times, switching from homeowners to renters, and apartment complexes are in higher demand than ever.
Many people are having trouble finding affordable housing to replace their homes that they can no longer afford due to growing mortgage expenses as foreclosures are occurring in this country at a record rate. Furthermore, with tighter regulations on mortgage loans, refinancing their current property has become more challenging, making it more challenging to acquire finance for getting out from under their mountain of debt. Many real estate investors are hesitant to acquire rental properties because they have preconceived notions about the issues frequently connected to apartment ownership.
Many investors are looking to other types of assets to round out their portfolios since they don’t want to spend their free time maintaining rental properties and tracking down unpaid rent. However, the return on an apartment building investment should provide the intelligent investor more reasons to think about this form of investment, particularly in today’s unstable housing market. Recognize that people will always require a place to live, regardless of the state of the economy.
Think about the chance to purchase other investment types, like stocks and bonds, with just 20% down. With the majority of investments, the chances of this occurring are extremely slim. On the other hand, an investor who can put down 20% of the cost of an apartment building will have a decent chance of getting the money they need to buy the building. Investing in apartment buildings offers investors access to millions of potential tenants and a higher rate of return than purchasing repossessed homes in a market that is already losing value. In reality, a lot of people acquire apartment buildings using owner financing with absolutely no down payment!
When searching for flats, care must be taken to make sure the building has been maintained and may be bought at the fair market value rather than an inflated price. Without having to pay a larger initial purchase price, many older properties that have been well-maintained can offer the chance to get rent increases that can compete with those of newer apartments in Fresno.
The ability to leverage the investment is the primary benefit of real estate ownership in general. Any increase in valuation will boost the property worth as well as the return on the buyer’s initial investment because most lenders are ready to lend up to 80% of the property’s value. Apartment owners can rely on their investment’s cash flow, or the money that remains after all costs are taken from rent revenue each month. To increase the return on the investment, this money might be deposited into an interest-bearing account.
If properly maintained and owned by someone who views the property as an investment vehicle rather than just a source of income, an apartment building in the correct neighborhood can also raise the neighborhood’s total property prices. The majority of apartment owners have discovered that if they take good care of both the building and its tenants, the investment’s return will take care of them financially in the long run.
I recommend reading my free mini course on apartment building investing, which can be found at Apartment Building Investor, if you’re trying to diversify your investment portfolio and would like to learn more about the various advantages of such an investment.