6 Reasons to Invest in Apartment Buildings

American is a nation of stock investors. Although the number of Americans who own a stock has been on a sharp decline, 52 percent is still a lot.

Where are these investors who are losing their faith in stocks putting their money? If you guessed real estate, you’re right.

Real estate is now a prime investment market for an increasing number of Americans – most who have shaken the fears caused by the housing crisis of 2008. If you’re looking to be a realty investor, you in good company.

But which real properties should you invest in?

In this article, we are sharing reasons to invest in apartment buildings.

1. Prospective Renters Are Increasing

Apartment buildings are popular among renters.

So if you have to invest in apartment buildings, then you’ve to be certain that you’re going to find renters to fill the property. After all, 64.2 percent of Americans are homeowners.

Here is the good news.

More Americans are now renting than at any point in the last 50 years! Whether this is because of harsh economic times or a dip in the supply of single-family homes, one thing is clear: finding tenants to fill up your property won’t be a big challenge.

2. The Growing Joys of Apartment Living

Yes, the feeling of being a homeowner is unrivaled, and the benefits are aplenty. For instance, you can design it to your tastes and keep as many pets as the property can accommodate.

However, apartments are also making a strong case for themselves. Apartment living offers unique benefits over homeownership.

At a time when most Americans are living paycheck to paycheck, apartments offer a cost-effective option. Renters or owners don’t have to worry about ballooning repair and maintenance costs.

Then there’s the beauty of serviced apartments.

These units provide hotel-like amenities, meaning the occupant won’t go through the hassle of furnishing it. Plus, most of these buildings have fitness centers, rec rooms, and other features that make apartment living exciting.

The gist of this is when you invest in an apartment building, you’re positioning yourself for success because, millennials, the largest living generation, prefer apartment living.

3. Appreciating Asset

No investor wants to lose money. You want to invest in a market that promises attractive returns.

Apartments, like most real properties, are appreciating assets. If you build or buy an apartment building today, 10 years down the road it would’ve increased in value.

That said, the appreciation of an apartment building will depend on you savviness as a real estate investor. If you don’t do sufficient market research and end up owning a property in a bad location or neighborhood, chances are high it won’t gain much value. In fact, it could even lose some value.

But even then, there’s only so much value an apartment building can lose. Unlike investing in stocks where a stock market crash can wipe out your entire investment, a housing market crash cannot render your property worthless. It can depreciate significantly, yes, but given enough time it will regain most of its value.

4. Dependable Source of Regular Income

Not many investments have the ability to return a regular income as apartment buildings.

If you are renting out the apartments, tenants will always pay up rental fees on a monthly basis, ensuring you have a regular income. The amount might not be steady because there are times when some units will be vacant, but with proper management and marketing, the property can maintain over 80 percent occupancy.

But what if you choose to invest in single-family homes for sale instead of apartment buildings?

Sure, single-family units are more lucrative, but you’re not assured of a regular income. You’ll only make a profit once a unit finds a buyer and there’s no telling how long they will stay on the market.

5. Ideal Collateral

Many investors rely on debt financing to enhance their portfolios.

As such, you might need to take out a huge bank loan to finance another investment project. However, lenders rarely give out large unsecured loans. They need collateral before lending big money.

With an apartment building on your portfolio, you’ll have an easy time securing debt – as long as you have substantial positive equity in the property.

Even if you might not need a loan to make other investments, you can secure a property line of credit. This can come in handy when you quickly need money to perform repairs or upgrade the apartment building.

6. You Don’t Have to Do the Real Work

What’s the first thing that comes to mind when somebody mentions “real estate investing.”

If you picture a person exploring the country in search of a good location to build or buy a property, nobody can blame you! Real estate is traditionally a physical market. You need to get your hands dirty to get work done.

However, this isn’t necessarily the case.

You can invest in a Real Estate Investment Trust and cut out the hard work.

REITs are companies that already own established and income-producing properties, usually including apartment buildings. All you need to do is buy shares in a REIT and wait for your share of the profits every year.

Apartment Buildings Are an Ideal Investment

Real estate is an attractive market for investors, and it’s easy to see why. But with several types of properties to invest in, you might be spoilt for choice.

Lucky for you, we’ve fleshed top reasons why apartment buildings should be your go-to real estate investment.

Now go make some real money, but don’t forget to keep tabs on our site for more real estate insights.

Speak Your Mind

*