Advantages of Apartment Investing

Apartments are arguably one of the best real estate investments that you can make. It is impractical to believe that you will be able to cover every possible advantage that investing in apartments has. As such, this article should be read as a broad overview of the apartment investing business and of some of the key advantages that apartment investing can bring. It is important to emphasize  there are more advantages than those stated below, but the ones that are stated are very large advantages and the biggest draws of apartment investing.

Cash flow is one of the biggest draws of apartment investing. One definition of cash flow is “the cash receipts or net income from one or more assets for a given period, reckoned after taxes and other disbursements.” Put simply, cash flow refers to the actual amount of cash that you have on hand from the operations of your business. Apartment investments can create a great, steady stream of cash. This cash comes by way of rents. Therefore, the amount of cash that you bring in is dependent on you level of vacancy. As such, it is in your best interest to keep your apartment building fully occupied. Of course there are many expenses in running an apartment building, but if you have an adequate property manager and are meticulous in the details, your revenue should far outweigh any and all expenses.

When you purchase a home as an investment property, you primarily rely upon the equity in the home for your profits. It is true that each home that you own could potential make you a couple of hundred dollars per month, but in order to reach the potential of an apartment building, you would have to buy numerous homes. As such, the profits generated from an apartment building could feasibly be your annual income while the profits from homes could realistically (absent you owning 10 or more homes) only be a supplement to your annual income.

Equity is another draw of apartment buildings. An apartment building could easily achieve levels of equity that most homes could never reach. As such, (assuming that your apartment building is profitable enough and you have enough cash flow) you could use this equity to purchase another apartment building and thus, expand your real estate empire. Keep in mind that one of the disadvantages of apartment buildings is they are expensive by comparison to homes. As such, you will have to have a lot of capital, or have investment partners that have a lot of capital in order to purchase one. However, if you can overcome this hurdle, you could be well on your way to a financial sound future.

Apartment buildings can contain profit centers that homes cannot. One most common example of this is the laundry machines inside an apartment building. Tenants usually have to pay to use these machines and thus, as the apartment owner, you will have another stream of income coming in from your apartment building.

As stated above, there are other advantages of apartment investing. As such, you may want to talk to a real estate expert before diving into such an investment. There are many factors to consider, and it is wise to analyze these factors before deciding whether or not to make the investment into apartment buildings.