How to Profit from Multi-unit Residential
Real Estates and Apartment Investments?
Apartment investments and 2-4 units homes investments are the main classes of multi-unit residential real estates investments. Why do we make this separation?
There are two main reasons for that. The first one is a different tax treatment in some cases (e.g. when a one unit is owner occupied). The second one, which is more important, is how the value of investment property is determined.
The value of 2-4 unit homes is established by market comparisons, in most cases. It is the same way as an investment home value is determined.
With apartment buildings, value is calculated based on net income. It is the same way as a commercial real estate value is determined. In another words, the more rental income you have, the higher value is appraised for your apartment building.
With apartment investments, we expect the main profit comes from rental cash flow. A lease to purchase option and leveraging investment money could be very useful.
We recommend practical course here on money leveraging in multi-unit residential real estates and apartment investments.
Proper financial evaluation and property management are the most significant components in multi-unit residential real estates investments. With cash flow from many tenants you, probably, hire a professional manager (or company) to provide property management.
Improving management (increasing rent, reducing expenses, etc.) you not only increase cash flow, you increase also the value of apartment building. Under estimation of this component can seriously damage your investment, even bring you losses.
We recommend excellent course on investing in apartment buildings here.
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