You may be asking, “Why would anyone start investing in apartments now? The residential market is so hot, we can barely find enough projects as it is!” The answer lies in those very statements.
We all know that real estate investing is cyclical. (Right? You do know that, don’t you? If you don’t, you need to start reviewing history, otherwise, you may loose everything you’ve built up these last few years!) Because of these known cycles, we always need to be planning for and anticipating the next phase, and investing in apartments is ours. Because of the inevitable nature of real estate’s up’s and down’s, we can – and should – plan our next steps. Investing in apartments is our next step.
The main reasons for my shift over the next 6-12 months are these:
- The residential rehab market will continue to tighten, with supply drying up. This makes it more difficult to compete.
- More and more competition from ‘newbie’ investors, those that are fresh out of ‘real estate boot camps’ and willing to pay way more than I am for a property (this is their inexperience).
- More and more people, when faced with the looming ‘market correction’ (what a phrase, huh: ‘Correction’) and the loss of jobs/hours, will need to downsize from houses into apartments.
- The baby-boomers are also downsizing, and will need to lower their overhead. By investing in apartments, we’ll be more prepared for this shift in economic lifestyle. And we’ll be able to ride this wave for the next 8-12 years, as this segment of our population goes through this shift.
- Cash flow. I’ll paraphrase a quote from Harry Helmsley: “I always liked the idea that a group of people would pool their money together to pay off the mortgage on my building.” Yeah, this sounds good to me.
Is investing in apartments tough? Not really. It depends on your approach. Some investors I know have amassed a a huge portfolio: two-thousand units up to five- & six- thousand units. These are BIG operations for a small group of people to manage. But this also presents an amazing opportunity to have safety. Here’s why: It’s tough to buy the hundred-plus unit complexes that can actually cashflow while they pay for on-site management, with a $100,000 retirement account. However, you can partner with people that have the same amount of money, along with a person who is responsible for putting this syndication together. There’s safety in numbers, right?
Over the coming months, I’m going to write more about this shift in our biz, the benefits of investing in apartments, potential returns, and some things to look out for within the syndications. I’m so excited to share this with all of you!
If you have a question for us, please post it on our FaceBook page: https://www.facebook.com/discreetinvestr