Looking for investment options? When you start to scout around, two of the most lucrative avenues that are likely to arise are the stock market and real estate. If you would prefer an opportunity where you have the assurance of steady returns and wealth-building, but without the volatility, then your best option is real estate, specifically investing in commercial apartments. It will interest you to know that close to 80% of millionaires assert that the secret behind their wealth is real estate.
However, the question still remains, which is the best kind of real estate to invest in? Should you spend time with the experts, you’ll learn that multi-family apartment investing is the one option that assures you of a steady cash flow and helps grow your wealth.
Read ahead for more of the reasons why investing in apartments should be your choice.
1. Multi-Family Apartments are Easier to Finance
Given a choice between a single family unit and multi-family apartment building with a larger number of units, you might find that raising finance for the apartment complex is more accessible. That’s because your bank or lender is fully aware that at any specific time, you have a better chance of having an at least 90% occupancy or better. But, if a single-family unit goes vacant, that’s 100% vacancy.
Even with some of the tenants being late with their payments, you’ll still have a steady cash flow. This factor makes the investment carry a lower risk of foreclosure which is a major positive for the lender. So, you see, investing in apartments is not only a smarter option, but you might find that you can also get more competitive interest rates from your mortgage provider.
2. You Economize on Management
Like many property owners, you would probably prefer to delegate the management of your assets to a professional. Should you choose to invest in a multi-family apartment complex, you’ll find that hiring a property manager becomes highly economical.
As a rule, managers earn a percentage of the earnings of a property. And, their duties include locating and assessing tenants, collecting rent payments and taking care of evictions, to mention just a few of their duties. These professionals also manage other aspects such as maintenance issues. An apartment manager will handle all these aspects for you leaving you free to focus on more important issues.
3. You Build Wealth with Equity Accumulation
One of the most interesting facets of investing in apartments is that you’ll only pay the down payment and let the investment accumulate wealth over time. For instance, say, the property you purchase is worth $1 million of which you paid $200,000 as down payment and financed the balance $800,000. With each repayment you make, you’ll reduce the amount you owe and collect equity on the property. Any funds that you accumulate after paying off expenses and any taxes translates into a cash flow that you can use. And, of course, the biggest positive is the appreciation in the value of the property. As the market value goes up, you earn more equity and lower your Loan to Value Ratio (LVR).
4. You Save on Taxes
Investing in apartments or providing housing is supported by the federal government that offers you various incentives and tax breaks. Here are some of them:
- Because you’re running a real estate business, you can claim deductions on your tax returnfor the expenses you incur including the interest on mortgage payments.
- As your CPA will advise, the government accepts that the property will lose value over time so you can claim depreciation deductions depending on the size of the apartment complex and various other factors. However, the property value will appreciate because of the rise in the value of the land it stands on.
- You can claim depreciation on items like light fixtures, carpeting, appliances, cabinets, and other sections of the apartment complex.
5. Raising the Value of Your Property is Easier
Should you choose to invest in apartments, you’ll find that by ploughing back some of the rent income into the apartment complex; you can raise its value and also generate a larger cash flow. Any improvements and renovations you make for the tenants are likely to be well-appreciated. As a result, they’ll want to stay on longer and may be open to paying raised rents.
Like, for instance, consider adding laundromats with coin-operated machines that can earn you an added income. You can also add energy-efficient light fixtures and improve plumbing to lower operating expenses and discourage tenant turnover.
6. You Build a Real Estate Profile with Less Time and Effort
Investing in apartments in a multi-family complex is likely to involve far less and time and effort than if you were to look for individual units. You’ll have fewer inspections to make, consult a single broker, and organize one mortgage in place of separate loans for each of the units you buy.
Or, Here’s Another Option! Syndicated Apartment Investing
You could get in touch with an expert agency like CAMBE Capital that assists you in investing in syndicated apartments. Such agencies take care of all the legwork for you beginning with scouting around for the most viable investment opportunities, evaluating them carefully by hiring professional inspectors, managing the paperwork, and arranging for the finance. If needed, they’ll even take care of the rehab and renovations to enhance the value of the property. All you need to do is make the funds available, and rely on the expertise of professionals to manage the investments for you.
For more information, contact us at CAMBE Capital. Talk to our experts and we’ll explain why and how investing in apartments is possibly the most lucrative investment option available today.