4 Reasons You Should Consider Apartment...

apartment Interested in learning about a strategy that can be extremely lucrative?

Well, keep reading, Moguls…

Jason Lucchesi here with a fascinating lesson. See, I’ve been thinking about the various strategies that can be used for investing, and I was talking with a friend (a fellow investor), who deals in apartments.

The information he shared with me was very helpful and actionable. It occurred to me that you could learn a lot from it as well.

Of course, as many of you already know, landlording single-family homes will always be a great strategy, but that strategy is very different from investing in apartments – multifamily units and buildings.

Let’s take a look at both options...

Investing in Single-Family Homes

Pros

Single-family homes are more affordable. You can easily get a good cash-flowing property for under $100k.
It’s possible to cash flow a few hundred dollars every month.
Single-family homes are easier to find than apartments — there are more of them. (You can typically find one in just a few months or less.)

Cons

Very hands-on — you always have to be marketing and looking for deals.
Single-family homes are more dependent on the market — comps are important.
Not as scalable — you can’t grow exponentially beyond where you are. If you have a goal to retire early, you need a lot of single-family homes to generate enough passive income to do that.

Investing in Apartments

4 Pros

More passive investment; less hands-on; apartment owners nearly always have a property manager to take care of daily operations.
Much more scalable. If you want to add 10 units to your portfolio, you simply buy an apartment complex with 10 units.
Financing is cheaper and better the bigger you go. You can get non-recourse financing, which means you don’t have to personally guarantee the loan.
Wealth-creation potential is much greater. A small increase in rent price has a huge impact, not just on cash flow, but also on the valuation of the building. You’re not as dependent on the local market. It’s all based on the income potential. The owner has much greater control over the value of the real estate than with a single-family property.

Cons

Need more money
Deals are harder to find — not as plentiful. This means more work at the outset, but less on the backend.

3 Skills Needed

Learn the lingo — you need to be able to answer the broker’s questions. The more you know, the better first impression you’ll make.
Learn how to analyze deals quickly so you can make more offers.

Like with all others facets of real estate, it’s all a numbers game. Buying apartments is more of a science than an art; very deterministic approach.

My friend said when he first started, it took him 4 hours to analyze a deal; now it takes him 10 minutes.

The faster you analyze, the more offers you can make. (Seek out other investors and ask lots of questions to learn this analyzing skill.)
Know how to raise money.

For many investors who are considering investing in apartments, the lack of cash seems to be an insurmountable hurdle. Once you understand the availability of investor cash, it opens up a whole new world.

Learn the process of gathering investors before you even find your deals. Then you can make offers with much more confidence.

The Bottom Line

If you were to have to leave your business for several weeks, would it still pump out cash flow for you?

If not, you may want to look into apartment investing.

Imagine what an extra $5k to $15k a month (after expenses) coming in from one or two apartment buildings would do for your confidence level and your lifestyle.