Updated: Jan 16, 2020
A building having 5 or more housing units is referred to be an apartment building, Owning apartments is the best way you can grow your real estate investment portfolio faster.
It used to be generally understood that houses increased in value at a greater rate than apartments, but it's anymore. It's possible for some apartments to increase in value more than some houses.
Investment in apartments can be a beneficial option, some of the pros of investing in apartments are:
Massive Re-sale value: There is substantially re-sale market of apartments, depending obviously on location, interior , facilities, vacant space, structure of building.The resale value is also high because they are fully constructed and come with a ready- to- move- in- tag.
Great Cash flow: Cash flow property is an investment where the income (usually derived from rent) is greater than the sum of all of the expenses of the property. Cash flows from medium to large apartments are more high and not much sensitive as small apartments.
Scope of profit: The scope of profit is relatively good as it generates a great cash flow, and if you ignore the common mistakes while investing in a apartment, you can get a good profit. It can generate ongoing passive income and can be a good long-term investment as the value increases over time.
Financial Leverage: A pro of investing in a apartment is the investment strategy of using borrowed money or borrowed capital specifically, to increase the potential return of an investment. Leverage can also refer to the amount of debt a firm uses to finance assets, it is good when it efficiently allocates resources and produces income so that debt can be paid back. Income needs to grow faster than debt, but productivity needs to rise faster than income, so raising productivity is paramount.
Monthly Income Stream: Investing in rental apartments can be a great source of solid monthly income that produces dependable positive cash flow that is higher than a typical stock dividend. Investing in it can always be a safer option.
Compact Property management: Investors who own single homes do not have external property manager due to their decreased portfolio size, where as Multi-family investor have a greater portfolio size and have great monthly income and can property management services without significantly cutting into their margin.