Apartment Buildings Offer Secure Real Estate Investment Opportunities

Wise investors are well aware that diversification is necessary to ensure security and long term growth of capital

. With today's volatile stocks and bonds markets, investing in real property can offer that secure growth potential in a well diversified portfolio. Investing in income property these days is considered a great risk by many with the residential housing market in such terrible disarray and foreclosures at an unprecedented high. However, it is this very market condition that offers great potential to investors in purchasing apartment buildings rather than risky single-family houses or commercial real estate.

Regardless of economic conditions, there is always a need for housing. With high-risk, declining value single family homes keeping many potential buyers out of the market at present and the high numbers of previous homeowners displaced, there is a tremendous demand for rental property. Economic conditions are forcing more people to seek rentals as the less costly option or even the only option available. With this increased demand, rental prices are increasing, making investment in multi-family properties an excellent financial vehicle for both cash flow and growth even if economic conditions deteriorate further.

Investing in an apartment building provides a hard asset along with a strong and reliable stream of income. Multi-family properties offer stable cash flow since there are multiple income streams. If one tenant leaves or defaults on rental payments, there are others who continue to pay. Single family homes offer only a single income stream that can be frequently interrupted by either default or an empty property between renters. Additionally, rental rates for apartments are typically lower than single family homes, making them more affordable and appealing to renters and thus, easier to keep filled.

Older, well-run apartment buildings can often be purchased for considerably less than the price of new construction. This makes rental prices more competitive than new construction apartments with higher mortgage costs. Though single-family residential loans are increasingly hard to come by, banks are eager to make loans on established multi-family properties at excellent terms. Generally, a bank will loan up to 80 percent of the purchase price allowing for significant leveraging of an investment that isn't possible with paper stocks and bonds.

Investing in an apartment building is an excellent way to protect assets and offset the effects of inflation in a time when assets decrease while prices increase. As rental prices increase along with other prices, the investment in an apartment building will continue to appreciate regardless of economic conditions.

by: Art Gib

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