Advantages of Apartment Investing

Are you one of those looking for a comfortable, financially stable future, in your own posh beach bungalow, with exorbitant interiors, lush green gardens, private golf course, most expensive limousine, and a fat bank balance, feeling a lot more secure than the rest around you? Imagine the thought of being one of those privileged men living in that part of the country, where it’s everyone’s dream to live for at least a day?

Imagine riding a chauffeur driven car to even go to the pub next door, or just sitting back and relaxing in the hot tub on the deck in your home, with a nice glass of drink, facing the sea and enjoying your evening – when majority of the people your age are rushing for their part time job to make some extra cash to make it for a descent dinner that weekend. Or, are you are one of those simple, plain types, who firmly believe that money rules man and you have to save your earnings carefully, for a safer, secure tomorrow?

Irrespective of which category you belong to, it is a naked truth that investment is of paramount importance to enjoy a comfortable and peaceful future. All of us are keen in understanding the best way to invest our today’s hard earned money to enjoy a fruitful tomorrow. Though there are a whole lot of invest options like stocks, mutual funds, insurance, etc. real estate – especially, investment in apartments proves to be one of the best means to invest today if you wish to reap great harvest later. At this point, you may wonder if apartment investment would result in 100% profit every time. Investment, of any form has some amount of uncertainty. No one can envisage, what tomorrow has in store for them, and accordingly plan their investments. However, none of us have heard of someone going bankrupt, or loosing his shirt having invested in apartments!

This article is target to give some insight to those of you looking at apartment investment as your preferred investment.

The first question most real estate investors ask is “Why invest in apartments?” – visualize investing in an apartment complex if you forget the initial struggle you go through in buying the property, and doing whatever it takes to attract tenants, then, as most apartment investors experience, investing in an apartment is more of a boon than a bane.

Picture 30 different tenants pooling in their money in the form of rent every month, so you pay your mortgage, your taxes, your staff, do the repairs, maintain your property, and still have money left to plan your other investments.

The future is welcoming
Researches indicate that in the next 5 – 10 years, the number of renters in the age group 18 – 35 years will increase by five to eight million, which means, much more demand for apartments than there is currently a point worth giving thought to by real estate investors.

With this hi-tech population looking for rental apartments in the urban and suburban areas, a few years from now will be harvest time for investors who invest their money in apartments now. If you are one of those who are ready to invest your time, thought, and money to analyze the current local market, population, and the type of apartments preferred, you will be able to see huge returns from the investments you make.

Preference is for apartments
With a steady increase in construction cost, directly impacting the purchase price, people prefer to rent apartments than buy one. Renters prefer to simply pay their rent, and enjoy the comfort of their apartment club house, fitness center, pool, hot tubs, tennis courts, children’s play area, and a lot more, without having to worry about mowing their lawn, spending extra on house repair and maintenance, pest control, etc.

Secondly, apartment lease agreements are much more flexible and of short durations (ranging from monthly, three months, six months, and yearly), compared to much longer lease terms for other property types. This, in fact is highly preferred by most people, because of job uncertainties, corporate transfers, project changes, and short term assignments at a particular location.

Moreover, people prefer to live in community environments, than in individual homes for reasons of safety, security, and closeness to friends.

By investing in apartments at the right place, in a good neighborhood, with good amenities, friendly property management staff, and flexible lease terms, you can pull out your actual investment in a much shorter span, compared to other types of residential building owners.

They are easier to manage
From the investor’s point of view, it is much simpler to manage an apartment complex with 30 units, than to have 30 individual homes mortgage papers, taxes, inspection, repair, and more. The effort, time, and money spent in owning and renting an apartment complex is far less compared to that in having many individual homes. So are the returns that you get.

Professionals make life easier
With a whole bunch of professional property management companies in the market, it becomes easy for you to pick one per your requirement, and have them manage the property for you, at a reasonable price. After all, it’s better to have a professional staff right in the property repair a burst pipeline at 2:00 a.m. on a Saturday night, than have the tenant call you living in a different state. You may have to desperately try to reach a handy man living just a stone throw away from your apartment complex to fix the problem, only to find out the next morning, that he was snoring so loud that he never heard his phone ring. By that time, the tenant would have been annoyed to that limit, where she may decide to leave the property, giving you the headache to find someone else for that unit.

Letting management companies’ mange your property has dual benefits one it keeps you in the comfort zone, where you can relax and take care of your other activities. Second, tenants too feel a lot more comfortable when they get first hand professional assistance right inside the property.

More Cash flow
Cash flow is always higher in owning apartments than single family homes. If you own a 30 unit apartment and you loose a tenant, you still have rents coming in from the other tenants to pay your mortgage and expenses. In contrast, if you invest on a single family home, and you loose your tenant, then you are at 100% loss of income from the property. With bigger cash flows, it also becomes possible for apartment owners to hire management companies to manage properties, which in most cases becomes hassle free.

There is another side for everything
As we all know, nothing is perfect. Likewise, apartment investment, just like any other investment has its own disadvantages too. Sometimes, many tenants may leave at the same time, leaving many vacant units. Or, there may be a few rotten apples in your basket (trouble making tenants), who may not pay their rent in time, or create a lot of trouble. Repair work may become more expensive due to increase in material and labor cost, or you may have a problem with your property management company.

If you understand how to over come these problems, and many more that may come up, then it may not be a bad idea, or rather a great idea to invest in good apartments and enjoy the comfort of great financial gain, simultaneously creating a notable name for yourself in the society. Who knows, a few of your tenants, who help you climb the success ladder may be those very people who dropped the idea of investing in apartments a few years before, for the fear of loss, while you took a daring step!