Apartment building investing is a sound strategy because it’s based on a real, tangible asset. The fact of the matter is, there are some really solid reasons commercial real estate investments work so well. Although, many who are new to apartment building investing will have a number of questions. That’s okay. If you’re considering investing in residential or commercial real estate, there are some important differences to know.
Multifamily Property Investing vs. Single Family
Now, most people start with residential properties. The majority do this because it’s familiar. After all, they’ve likely rented and/or owned a house. So, they feel more comfortable. But, the truth is, multifamily property investments are just better performers. But, why is this the case? Well, it’s all about the numbers. If you rent a single family, you charge one rent. Which means late payments and no-pays are a huge deal.
Moving into the world of commercial real estate can be pretty intimidating. It’s a different world, but it’s a lot simpler than you probably think. That’s especially true of apartment buildings. If you can own a rental property, you can handle owning an apartment building. —The Motley Fool
With a multifamily apartment building, you collect several rents. Another advantage apartment buildings have is size. And, that size translates directly into larger appreciation. Plus, with an apartment building, you’re open to a wide pool of renters. Single family renters are more niche and the competition is more fierce.
Why Apartment Building Investing is So Smart
All of these benefits are made better by many other factors. Here are some of the most compelling reasons for apartment building investing:
- All resident units in one location. If you purchase a single family home, it’s quite unlikely you’ll be able to buy the house next door. Residential property investors typically have properties scattered about a geographical location. Which makes them much more difficult to manage. But that’s not the case with multifamily.
- The ability to create increased cash-flow. With residential real estate, you’re basically stuck as to what you can do to improve the value and hence, the rent charged. However, an apartment building is an entirely different matter. Because in that scenario, you can add things like coin operated laundry, rent storage space, and make other improvement and amenities to charge higher rents.
- Apartment buildings hold their value very well. Yet another advantage apartment buildings have over residential is they hold their value better. And, if the local residential real estate market changes, more people will look for affordable alternatives.
- Attractive tax benefits in multifamily properties. Last but certainly not least is the fact there are some highly beneficial tax advantages to multifamily properties. It just gives more in the way of taxes than residential could ever offer.
If you’d like to learn more about commercial real estate investment benefits and more about the process, please contact me.