Why invest in apartments?
In recent years, apartment buildings have become a popular investment option for real estate investors interested in finding good yields on their money.
As interest rates have dropped dramatically for multifamily and commercial mortgages the income to expense ratio has grown because the lower the rates and the mortgage payments, the higher the monthly cash flow will be.
Lower Vacancy Rates – Increased Tenant Demand
Millions of homes foreclosed in recent years and the tightening up of lending standards has forced previous homeowners into apartment units. As a result, apartment vacancy rates have fallen significantly in most areas. As this is expected to continue well managed apartment buildings will realize an increase in value.
From the very beginning of my investing in real estate, I liked the idea that a group of people (the tenants in a building) would get together and pool their money to pay down the mortgage on a property, and I liked the idea that they would also pool their money together to pay for all of the maintenance work for a building. I also realized that there were certain advantages that investing in multi-units buildings had over single families.
- The first was cash flow. Cash flow on a multi-family is always greater than that of a single family. Simply because you have more rents coming in. The more units you have under one roof, the less risk you have. More specifically, properties with more units, generate larger cash-on-cash returns than properties with fewer units
- Economies of scale are in mulit-unit buildings. If you have six single family houses opposed to one six family, you have six roofs to be replaced or repaired, six lawns to be maintain, six tenants spread out throughout your city or town. In your six family you have one roof, one lawn and your tenants are centrally located. Economies of scale are in your favor.
- There’s a lot less competition than there are in single family houses. Why? Because apartment buildings take a larger cash investment in which most people cannot do on their own.
- Because of the bigger cash flows, we can afford to hire the best management companies to manage our tenants, thus eliminating that hassle while we go out and do what we do best, find and finance them.
- Unlike residential properties where value is based on comparable properties, commercial multifamily is valued based on the cash flow or net operating income from the property, because of this we can create “forced appreciation” by increasing income. We can literally control the value!
Let Your Money Work Harder and Earn More
When the returns from investing in an asset exceed the rate of inflation, it is considered to be a good hedge. Apartment buildings are some of the best ways to generate exceptional monthly cash flow for investors today, especially now that interest rates are near record lows.
Syndication Groups for Owning Apartment Buildings
To take advantage of the opportunities in the world of Apartment Investing we put together “buying groups” for the purchase of these assets. The group comes together to provide capital and become Equity Share Owners.
This type of “group buying power” allows our partners/investors to take advantage of owning apartment buildings as a team with smaller amounts of cash per investor contributed while sharing in the monthly cash flow and appreciation. We typically hold each property 5 years to allow our team to maximize cash flow and appreciation. Then we usually sell or refinance the property. When the property is sold or refinanced you are repaid you initial investment with your share of profits.
Remember, being an Equity Share Owner, you get paid SEVERAL ways…
- Starting on day one, you receive a very nice monthly cash flow that is paid to you quarterly;
- When the property is refinanced or sold you are repaid your initial investment with your share of the profits.
Please understand that our Private Investor Program is NOT for everyone. We prequalify and prescreen potential investors before they can take advantage of the opportunity our “Private Investor Program provides. For those that we determine are qualified this affords the individual investor an opportunity to participate with an organized group of like-minded and sophisticated Investor Partners in the ownership of a income generating asset.
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