Real estate investors have long recognized the benefits and multiple returns of rental property ownership. These investors have found real estate to be better than stocks, with the prevailing “buy low – sell high” strategy.

They’ve also realized that the return from bonds, though lower risk investing, isn’t going to meet their long term needs.

Why Invest in Real Estate At All?

Rental property real estate investment has proven over time to be low risk, but high return investing. The high returns come from:

· Cash flows from rents

· Tax advantages from depreciation and other tax write-offs

· Paying down mortgages, freeing up equity for other investments

· The old standby buy low and watch the property value appreciate over time

Applying these investment objectives to a single family property, or a duplex, a great many investors have found the ability to leverage and increase the number of properties in their portfolios.

But, if owning a half dozen rental homes is good investing, is there a better way to use the same cash to increase the number of rental units?

Same Investor – Multiply Returns with Apartment & Multifamily Properties

One reason many investors do not consider the apartment & multifamily investment opportunity is their belief that it’s beyond their financial ability.

This is definitely not the case. The same amount of cash that can be required to purchase and mortgage a half dozen single family rental properties could purchase an apartment or multifamily project with many times that many units.

Yes, the purchase price is much higher, but the mortgage financing is based on cash flow rather than the credit history or income of the buyer.

Cash Flow Makes The Deal

Instead of going to a lender with a credit score, down payment, and proof that the borrower can make the notes, the apartment & multifamily investor goes in with a cash flow analysis of the property.

Sure, there are other factors, condition, location, structure and land value, but it’s the cash flow that seals the deal. The lender applies certain ratios to determine how secure the cash flow will be, with normal vacancy and credit loss rates. If there’s enough cushion for the unexpected, the loan can be secured.

Real estate investors shouldn’t limit their possibilities using residential loan qualification factors as a guideline. Apartment & multifamily investment is about cash flow, and security of that cash flow.

I’ll share more with you soon…

Warm Regards,

Karen Hanover, CCIM Candidate
Apartment Education Institute, President

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