Today’s housing market is much different than it was 10 years ago. In recent years, the demand for apartment-style living has skyrocketed. Millennials are driving this shift in lifestyle because they prefer to live in walkable communities that offer amenities like restaurants and grocery stores right outside their front door.
If you’re looking for a new way to invest your money, an apartment complex might be just what you need. But why should you invest in an apartment complex and not some other real estate property? Here are 4 reasons why investing in an apartment complex could be the perfect opportunity for you.
You can diversify your portfolio
Investing in a single, large real estate property is a risky move. If you put all your money into purchasing a single property and the housing market suddenly drops, you could lose a significant amount of money. On the other hand, if you diversify your portfolio and invest in multiple properties, you can help protect yourself from any drastic market changes. When you invest in an apartment complex, you’re buying a piece of a larger property with several different units that you can rent out. This gives you a wider range of options for finding tenants and making money from your investment.
You can use leverage to increase your ROI
If you’ve heard the term “leverage” before, you know that it’s a great way to make a ton of money when you invest. Essentially, leverage allows you to make a larger investment with less cash. For example, if you want to buy a single-family home but don’t have enough money, you can still purchase by taking out a loan. The amount of money you borrow is the amount of leverage you’re using.
One common way to use leverage when investing in an apartment complex is to get a private investor to partner with you on the purchase. This private investor will typically provide you with a loan in exchange for a percentage of your profits off the property. When you use leverage to invest in an apartment complex, you can increase your ROI by using the profits from your investment to pay off your initial loan.
Apartment complexes are highly profitable
Unlike single-family homes, apartment complexes are a very profitable type of real estate. When you purchase an apartment complex, you’re buying a large piece of land with multiple units for tenants to rent. You’ll collect rent from the tenants living in your units, and you can also charge utility fees to the tenants using space on the complex’s property but not living there. This makes apartment complexes highly profitable because you’ve got several different income sources from just one piece of real estate.
It’s an opportunity to learn more about real estate investing
While most property investors jump in and purchase single-family homes, opting for an apartment complex can help you to polish your skills as a landlord and investor and discover more about real estate and financing from a different angle. By installing an apartment video intercom system, motion sensor lighting, external lighting, and secure doorways to restrict access, you can discover some new and different angles associated with property management to diversify your portfolio and your knowledge and skill level.
There is only so much you can do with a family home; however, apartment complexes add another layer of complexity, such as maintenance of communal areas, offering extra amenities such as a pool, and learning about security options a single home wouldn’t require.