This is a major advantage to multifamily investing. Another advantage is the financing is different. Say for example, you want to buy a single family home and rent it out. Bankers will look at your personal finances and your personal debt/income ratio to see if you can afford it. They will look at your income and decide if you can afford the mortgage on the rental property out of the income you make from your job.

This can make purchasing a single family rental difficult since most average people cannot handle their personal debt and mortgage on the home they live in along with the mortgage on a rental house. Now, I personally like certain aspects of owning some single family houses and still recommend having them in your portfolio but this can be a challenge as you try to accumulate them.

Apartment investing is a little different because the banker will consider the income that the apartment brings in. Bankers look at apartments as a business and therefore the cash flow and gross income will be considered. Single family homes are looked at as vacant and not bringing in any income when you purchase them.

Another advantage to apartments versus other types of commercial properties is your customer is a residential tenant. There are a lot of renters in our society. If you own a commercial building such as a strip mall, your tenants are other businesses. It takes a lot longer to find a business to fill your vacancy as compared to finding a renter looking for a place to live. This makes apartment investing very attractive.

There are some disadvantages to investing in apartments that you should be aware of. First of, there are multiple tenants which means multiple scenarios and problems. This also means more repairs. Because of this you almost certainly need a manager. I recommend hiring a company as opposed to hiring someone to be your employee.

Another challenge is that apartments are such a good investment that there are getting to be a lot of apartments built. I have noticed in several cities that new apartments are being built everywhere. In talking with investors it seems the older buildings, those over 12 years old, are suffering vacancies if they do not lower their rents due to newer competing apartment buildings. You should definitely consider this before purchasing. Another disadvantage is increased regulation. There will be more city codes to obey for an apartment building versus a duplex or single family home.

Apartment investing can be very lucrative. It is one of my favorite types of real estate investing. To be successful you need to do your homework, analyze your market, get inspections, and do at least 100 comparisons before buying one property.

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