In a word…Yes.
In todays economic world, it’s important to remember that most people will Rent a home or apartment before they ever Buy one.
Who rents apartments? The median age range for apartment rents is 18-35. Longterm, the number of renters in this age bracket is expected to increase by more than 5 million over the next 15 years. Can you say cha-ching?
When considering apartment/multi family unit investing, CASH FLOW (the net income of your investment) is the most important piece of the puzzle. It’s also very important to calculate your expected or estimated vacancy rate. That way you can be sure that even with a certain amount of units vacant for a 6-12 month period, the property still cash flows and you’re happy with that return. There would be nothing worse than your multi family unit cruise ship going under because you didn’t factor in your vacancy rate.
How does apartment investing compare to single family home investing?
More than likely, an apartment building is going to be priced higher than your average single family home. But a HUGE key to any RE investment is buying right. You make your money when you buy, right? Same goes for apartments. You want to buy something with equity already built in. Now that doesn’t mean it has to be 500k in equity, but it should be enough to make it an attractive deal.
Single family homes usually have washers and dryers. When you’re doing your laundry at home do you stress over not having enough quarters to finish your whites? No. That’s where apartment buildings come in. They can have another built in profit center that smells clean and green. Laundry machines can provide an owner with another stream of PASSIVE income.
….In part 2 i will discuss getting financing for your apartment building, what areas to buy in, and how much to charge for rent. more to come….
-Adam
The King of The City
