For experienced investors looking to increase their number of properties, there will come a time when you need to decide between owning several individual properties or taking the leap and buying an apartment building. For many, the decision comes down to a few critical factors: expense, revenue, and difficulty.
The ease of individual properties.
Investing in individual properties, such as apartments in different buildings or single-family properties, can be great for first-time investors. Taking on more than one rental as your first investment is a lot of stress and can put you upside-down financially if you make a terrible decision. We recommend an individual property for the first-time investor unless you are going in as part of an investment partnership.
Individual properties are better for the particular investor.
Sometimes you might consider investing for a reason that's out of the ordinary. Perhaps you plan on living onsite, or maybe you have a specific location in mind. It's not nearly as easy to find apartment buildings for sale, so if the location is a priority or you are particular about something, the decision may be out of your hands.
Single-family properties have a lower barrier to entry.
Investing in a single-family property is generally cheaper than any commercial real estate. Investing in single-family homes also allows you to diversify your portfolio. You can invest in properties in many different locations, hitting different markets.
Apartment buildings are easier to manage.
When it comes down to it, investing in an apartment building is easier to manage than multiple individual properties.
When you have twelve tenants, you can call on them all in one day if they're all in the same building. If you have repairs or upgrades to make, you can prioritize based on your actual tenant needs.
Speaking of tenants, if you have good tenants and they're happy in your property, there's a good chance they'll help you find other tenants.
Less selling, less driving around, less repairs, and less time invested by you.
Apartment buildings have a more reliable income stream than single property investments. Apartment buildings also accumulate less debt than single investment properties do. The amount of the property's net operating income (NOI) is higher on apartment buildings than on other investments, thus increasing your revenue and decreasing debt quicker than other investments.
The biggest con of apartment building investments is that it is expensive to begin as an early investor. The cost of investing in an apartment building is much higher than a single-family home.
However, a goal of investing in multiple apartment buildings allows you to make money faster, quickly grow your portfolio and invest in many more properties than you would be able to with spread out investments.
At the end of the day, the choice is dependent upon your starting financial ability, your experience in real estate investing, and your preferences! At Regalway Homes, we know how to help. With our mentorship program and our expert investors' help, we will help you make the right decision for you.
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