How to Buy Apartment Buildings and Create Wealth in Today’s Economy

Too many investors are under the mistaken impression that real estate is no longer a viable vehicle for their money. The reality is multi-family apartments can be an excellent addition to an investment portfolio. In these troubled financial times many families are being forced from their single-family dwellings, going from homeowner to renter and apartment buildings are more in demand than ever before.

With foreclosures coming at a record pace in this country, many people are finding it difficult to find affordable housing to replace their homes they can no longer afford with rising mortgage costs. Additionally, refinancing their existing home has become more difficult with tighter controls over mortgage loans, making it more difficult to secure funding for getting out from under their heavy debt. Many real estate investors shy away from owning rental properties, with visions of the perceived problems often associated with apartment ownership.

The idea of spending their free time maintaining rental properties and chasing down late rents has many investors turning to other form of investments to round out their portfolios. However, the return on an apartment building investment, especially in today’s volatile housing market, should provide the savvy investor more reasons to consider this type of investment. Understand that no matter the condition of the economy, people will always need a place to live.

Consider the opportunity to buy other forms of investments, such as stocks and bonds, with 20 percent down. There are very few opportunities for this to happen with most investments. On the other hand, an investor that can put down 20 percent of the purchase price for an apartment building has a good chance of securing the needed funding to purchase the property. Buying an apartment building offers investors millions of potential renters and provides a better return on their money than buying into foreclosed homes in an already depreciating market. In fact many people use owner financing and actually buy apartment buildings with no money down at all!

When looking for apartments, caution must be used to ensure the property has been cared for and can be purchased at the current market value instead of an inflated price. Many existing properties, that have been well maintained, can offer the opportunity to receive higher rents that can compete with newer apartment complexes, without the higher initial purchase price.

With any investment in real estate, the main benefit of ownership is being able to leverage the investment. With most lenders willing to loan 80 percent of the property’s value, any valuation increase will not only increase the property value, but will also improve the return on the buyer’s initial investment. Apartment owners can count on the cash flow from their investment, that is money left over every month once all expenses have been deducted from the rent income. This cash can be placed into an interest-bearing account to add to the return on the investment.

An apartment building in the right neighborhood can also improve the overall property values in the neighborhood with appropriate maintenance and an owner that considers the property as an investment vehicle as opposed to looking at it only as an income generator. Most apartment owners have found that if they take care of the property, as well as their tenants, the return on their investment will take financial care of them for the future.