Being a real estate investor allows you to grow your money exponentially. In fact, even though you quit your 9-to-5 job, it can help you earn a steady flow of income to secure your financial future. While it is risky, having well-chosen assets offers excellent returns, predictable cash flow, and other financial rewards that can help you build your wealth over time.
If you want to become a successful real estate investor and buy an apartment building, this article can serve as your guide. We will discuss the basics of apartment buying and help you understand its pros and cons.
What Are the Cons of Buying an Apartment Complex?
Apartments can be difficult to manage, especially if you are a first-time owner. While you can choose to outsource this daunting task to a property management company, you have to pay 10-20 percent of rents or flat fee arrangements.
As an apartment owner, you can also face additional liability risks. This is especially true if you run a larger multi-story complex or your property has accident-prone areas, like pools and gyms. You can be responsible for covering hospital bills and other fees if someone gets injured on your premises. In addition, you have to undergo safety inspections and deal with legal compliance issues, which can be time-consuming and expensive.
If you plan to sell your apartment building in the future, expect the selling process to be challenging. It can often take several months to find the right buyer and close the deal.
What Are the Pros of Apartment Investing?
The majority of investors choose to venture into real estate because of the steady cash flow they can earn in the form of monthly rental income. You can earn enough to cover your entire expenses and make extra money on the side, especially if your property is located in urban cities, areas with universities, or other high-demand places. Best of all, you can secure a steady income for a long time and even save enough for your retirement.
As your apartment appreciates in value over time, the consistent income real estate investing generates can help you attain peace of mind through long-term financial security. In other words, your property’s value is most likely going to increase because buildings are appreciating assets.
Additionally, this rental income you receive monthly from tenants is more than enough to cover your mortgage payments. It essentially means that your tenants are the ones paying your mortgage, so make sure to keep them happy and avoid vacancy as much as possible.
When investing in real estate, you can also tax exemptions and deductions from owning a rental property. Your rental income is not subject to self-employment tax, and you can take advantage of tax breaks for insurance, maintenance repairs, legal fees, and more. You are also entitled to lower tax rates for long-term investments.
Buying your very first apartment building can be complicated. Fortunately, you can now follow the footsteps of successful real estate investors you aspire to become by remembering the pros and cons stated in this guide. With this article, you can make a more informed decision about your investment and start your journey in real estate off on the right foot.
If you are ready to start buying apartments, feel free to seek help from Buying Apartment Buildings. We specialize in multi-family apartment buildings for sale. Claim your free e-book now to learn more about investing in multi-family complexes!