Real estate investing has been proven to be one of the only businesses that creates real wealth and has made more millionaires than any other business in history. The reason is because real estate is not just a business, but it is a real and physical asset that is very tough to destroy and if it were to ever be destroyed, there’s insurance to secure. For this and other reasons in this article we will be discussing the topic of real estate investing in larger apartment buildings which can also explain tenant representation services.
Real Estate Investing In Apartment Buildings
There are many different ways to invest in real estate, but one of the most secure and profitable is investing in large apartment buildings. A large apartment building is anything that contains more than sixteen units. You can check these guys out to see for yourself. Lenders see small apartment buildings as duplexes and triplexes, up to five units. Anything more than five units becomes commercial, as opposed to residential and the rules and regulations change. There are a few reasons why investing in large apartment buildings is a great business choice, and these are the following:
When you put a large deal together you get paid what is called an “acquisition fee”. This fee is anywhere from one to five percent of the total purchase price of the deal. For example, if you put together a ten-million-dollar deal and your investors agree on a three percent acquisition fee, you will be paid a $300,000 check as soon as the deal closes. This is the “instant income” bullet point, and this happens for every deal you put together. If you do your market research correctly, you will find a positive growth everywhere in the market which will create appreciation for your building which can increase its future value by hundreds of thousands, and sometimes millions of dollars.
A large apartment unit is one of the best business to have because your tenants will pay monthly rent and if you manage the income and expenses correctly, you will have a nice amount of positive cashflow to use for whatever you want. Just ask Thomas Mensendiek. Because you have more units than say a triplex, your vacancy percentage is protected. If the owner of the triplex loses a tenant, he or she is now 33% vacant, but if you have a 16-unit building and lose a tenant you’re only 7% vacant. In three to five years you can refinance the property and re-pay your investors and during the term that you hold the property, you can write off everything from unit upgrades, to trips to and from the property. You can simply Google My Business if you want to learn more.
In conclusion in this article we discussed the topic of real estate with an emphasis in investing in larger apartment buildings of sixteen or more units. The reasons why you should focus on these instead of smaller apartment buildings or single-family homes are listed above. They include being able to keep your vacancies low, having large appreciation potential, writing off certain items come tax time, and having the option to refinance in three to five years or once your return on investment (ROI) goal has been met.