How to Invest in Apartment Buildings : Real Estate Investment Tips and Strategies
Investing in apartment buildings has always intrigued me but has never been my focus. My company’s niche has been buying single family houses between $130K-$170K ARV. But, I did acquire a couple small apartment buildings early in my career, and there are definitely some advantages to investing in apartment buildings.
This seems like a popular topic amongst investors, and since I’m no expert at buying apartment buildings, I found someone who is. His name is Matthew Martinez. Matthew is the author of 2 Years to a Million in Real Estate, the founder of one of the largest real estate investment associations in the country, and has been interviewed by The Wall Street Journal, Money Magazine, and The New York Times. CNN even called him a tycoon in the making!
Matthew’s second book, Investing in Apartment Buildings, is due to be released in November. Here’s a small excerpt . . .
The Dwindling Middle Class
I’d be remiss if I neglected to implore you to act now rather than waiting and planning to begin at some time in the future. My argument for taking action immediately is outlined in this introductory chapter. Primarily, I’m convinced that the middle class—families with incomes between $40,000 and $200,000 a year—is shrinking at an alarming rate as a result of the financial burdens of our time. If you classify yourself as middle class (based on this definition), you, too, should be alarmed, but I’ll explain how investing in real estate can help.
There are three distinct socioeconomic strata in the United States, and the chasm between the upper and lower groups is becoming increasingly more pronounced every day. As the income gap between these two groups widens, it highlights the inequality between those who have achieved financial prosperity and those who find themselves caught in a perpetual cycle of financial instability, poverty, and lack of opportunity. Sociologists refer to this demographic divide as the “haves” versus the“have-nots.” Both of these groups are growing in numbers, but primarily at the expense of the middle class.
Burdened with excessive credit card debt and facing a precarious job market that has been severely stunted by the subprime debacle, the credit crunch, recession, the Iraq war, terrorism, and several recent natural disasters, the middle class is desperately trying to survive in this unstable environment. However, given the current economic climate, its future seems anything but prosperous. In fact, those who continue to classify themselves as members of the dwindling middle class are finding that their wages have stagnated and that their chances of reaching greater financial prosperity are seemingly negligible.
That got my attention whenever I first read it. And now for the solution! (oh yeah, click here to download a couple chapters from the Investing in Apartment Buildings book pre-publication)
The Solution: Passive Income
Most individuals start investing in real estate because they perceive it as a path to wealth and financial freedom that will permit them to no longer need to work a day job. You can achieve financial freedom by creating a passive income stream that is large enough to cover your ongoing expenses, or you can achieve it by having a large enough “nest egg” to enable you to live off the proceeds from the interest earned each year. Income-producing real estate (specifically from apartment buildings) can provide a healthy income stream for you and your family during good times and bad. Apartment buildings are unique assets that can generate significant passive income for the rest of your life. Passive income is the profit created from rental activity and is one of the primary benefits of owning such valuable assets. One of the goals of multifamily ownership is to buy apartment buildings and manage them properly so that they generate a profit each year (i.e., they have positive cash flow). When you achieve a stabilization of your portfolio, apartment buildings can provide a sufficient financial cushion and protection should you fall victim to any of life’s less favorable “chances.”
I recently met with the owner of a 50-unit apartment complex. He was 82 years old and quite frail because he had suffered a stroke a year earlier. He had owned the property for 30 years and had paid off the mortgage. Since it was generating $15,000 in positive cash flow each month, he was able to sleep well at night, knowing that his wife could live off the income from the property should he pass away. This is why passive income from apartment investing is so coveted.
I suggest if you have an interest in learning how to buy apartment buildings, download the free chapters from the book. Investing in Apartment Buildings looks like a great addition to any real estate investor’s library. You’ll feel the same way after you read the free download.
Digg it
Save This Page
Subscribe to Must Know Investing
Leave a comment
Facebook
Linked In
Twitter
Technorati
StumbleUpon
Youtube
Patrick Riddle:
Dusty Keefe:
Just fixed the links for the free download so that they go to the right page.
You’re good to go to get the free stuff now.
I agree totally. Here in Spain you can invest in apartment-buildings right now very cheap. The prices collapsed in the last 12 months. I think in this time of the crisis it is the best moment to invest.
Great site! Your recommendations are spot on! If any of your readership is interested in Ann Arbor Real Estate,I’m your man.
With over 15 years in this business and direct connections to student housing on University of Michigan’s campus, I can assure your readership of fantastic cashflow opportunity.
Eric Pointer
This says it all:
“Burdened with excessive credit card debt and facing a precarious job market that has been severely stunted by the subprime debacle, the credit crunch, recession, the Iraq war, terrorism, and several recent natural disasters, the middle class is desperately trying to survive in this unstable environment.”
I think now more than ever is a good time to get into apartments. In California more than 50% of the people living in metropolitan areas are renting (buying houses is still to expensive). I am a firm believer that apts are great way to turn a profit as the demand will continue to increase for the foreseeable future.
[...] How to Invest in Apartment Buildings : Real Estate Investment Tips … [...]
since obama was elected he may try and redistribute the wealth
however we should leave it up to ourselves to make a living. owning an apartment building can be a hassle if the tenants bother you, but you can find a management company to take care of that
I own several houses, but am really wanting to move to the bigger pie with a small complex of apartments. But it takes a lot of capital to invest in apartments. I know that right now is the perfect time to buy but I would have to find investors, and I don’t like own all of my investments 100%, so I am stuck.
Fort Collins Apartments,
Don’t let a lack of funds stop you from pursuing buying apartment buildings. There are a ton of different ways to structure deals that you could make work.
Often times, owners of apartment buildings are willing to take back financing. You could get private money for whatever cash is needed for the deal.
Check out the private money videos and if you have any questions, shoot me an email.