Are you planning on buying an apartment complex in 2021 but you’re not sure if it’s still a good investment or not? If so, you’ve come to the right place.
There’s no denying that an apartment complex can be a big investment, this is why in this article I will provide you with the pros and cons of buying an apartment multifamily property so that you will know and have confidence that apartments are the right investment for you.
What Are The Pros Of Buying An Apartment Complex?
Buying an apartment complex will be one of the best investments that you will ever make, some of the pros, or benefits that you will enjoy from this investment include the following:
- Cash Flow – With an apartment complex, you will enjoy consistent cash flow every month that won’t always be affected by the stock market or economy because people always need a place to live. As long as you offer your tenants a safe place to live that’s also clean and well-maintained, you can count on earning consistent cash flow from that property every month in 2021 and beyond.
- Tax Incentives – Make no mistake about it, tax incentives are another excellent reason to invest in an apartment complex. You will be able to enjoy depreciation and mortgage interest deductions including the ability to deduct utility and travel costs as well.
- Leverage – One of the great reasons to invest in apartment complexes is leverage. With this investment, you can put down 25%-30% and finance the rest of the purchase over 30 years.
- Passive Income – Another excellent reason to invest in apartments is passive income and it’s going to be income that you can rely on unlike income that’s tied to the stock market.
- Partnership Potential – Don’t feel like investing in apartments yourself? There’s always the potential to invest in apartments with a partner. This will help you to maximize your profits and invest in bigger properties without having to do everything yourself.
- Equity – As with investing in single-family homes, when you own an apartment building, you will also be able to enjoy the benefit of equity build-up over time as you pay the mortgage off.
What Are The Cons Of Investing In Apartments?
As with any investment, there has to be some cons, or negatives which come from investing in apartments right? Here are a few notable cons to keep in mind before you invest in an apartment complex.
- Time investment: Selecting, financing, and purchasing an apartment complex can take months. And, while you can hire a property management company to take care of many of the day-to-day responsibilities of apartment ownership post-purchase, you’ll still need to spend a certain amount of time supervising the management company to ensure your investment remains profitable.
- Local market factors: While smart multifamily investors are careful to purchase real estate in great locations (or locations that seem to be trending towards greatness), no one can predict the future. For instance, the neighborhood you thought was gentrifying could see an increase in crime and poverty, leading to a steep decline in the value of your investment.
- Vacancies and tenant issues: While tenants generally provide 95% or more of the income generated by an apartment property, they can also cause serious headaches. Even tenants with great credit and long-term leases sometimes leave unexpectedly, not to mention those who fail to pay their rent, or worse, cause significant damage to your property.
- Liability: While smart property owners always have a robust insurance policy, owners still could potentially be held liable for accidents and crimes that occur on the property. This risk is non-existent for comparable investments such as stocks, bonds, or real estate investment trusts (REITs).
- Maintenance expenses: From windows and railings to appliances and lightbulbs, apartment buildings often need constant maintenance, and landlords are responsible for paying for it. While insurance may cover larger items, maintenance, repair, and replacement costs are still significant expenses.
- Low liquidity: Unlike stocks or bonds, you can’t simply click to sell an apartment building– and, even if you could, you might not get the price you want. Multifamily properties often take several months to sell, and closing can be a time-intensive process.
Source – Multifamily. loans
Don’t Want To Invest In Apartments By Yourself? We Can Help!
At Trier Capital, we are a private equity firm that makes it easy for you to passively invest in lucrative apartment building syndications.
Our simple step-by-step process allows you to accelerate your wealth creation so you can live a magnificent life on your terms, whether that means traveling the world, spending more time with family and friends, or making an impact.
If you’re an accredited investor who is ready to invest in an apartment complex, so you can earn passive income, I invite you to contact me at (630) 229-2383 or click here to connect with me online.