Investing in Hagerstown Apartment Buildings
There are many investment vehicles out there in the investing world, some are safe and some are risky. The higher the risk, the higher the return is most cases. However, as mentioned in previous Posts, Real estate combines the best of both worlds; High return with low risk. As you may know, there are different vehicles when investing in real estate. One investment vehicle that can accelerate you to financial freedom is apartment buildings! Everybody has lived in an apartment at one point or another. The truth is, Apartment buildings is a phenomenal investment opportunity for investors. Not only do they have a higher cash-on-cash return, they have a lower risk compared to single family homes, in vacancy rates and expenses overall! In this Post, I will describe in detail the benefits of investing in apartment buildings, with the aim to convince you to either start investing or start learning how you can become financially free with apartment buildings! I will also explain where you can find apartment buildings cheaper than buying a single family home!
When investing in real estate, the Return on investment is key. You invest to ultimately protect you initial capital and get a high return on your money. Apartment buildings are considered commercial real estate because anything above three units or more is viewed as commercial real estate in the eyes of loan officers. When you buy a single-family home as a rental property. You are limited by a single unit, one source of cash-flow. In the other hand when you invest in apartment buildings, you have three or more units providing you with different sources of cash flow. On average, apartment buildings provide you with a higher return! There is a reason why Commercial loan officers look at the Cash-flow trail FIRST, then the individual applying for the loan. Lastly, when renting out apartments, you have more control of your cash-flow. For instance, you can increase rent just by doing some cosmetic work to the apartment. If you manage the units efficiently, you can truly maximize your ROI!
Lower vacancy rates
I know what you are thinking, what if I have an empty building! Gosh! I will lose so much money?! You are right, that is possible but very unlikely. There is a high demand for apartment buildings:
1.In the past 5 years, foreclosures have increased, leaving a lot of previous “homeowners” without the ability to buy. This leads to an increases the demand for apartment rentals.
2.Millennials form more than ¼ of the US population, the majority of this group has high levels of debt (student loans?). Millennials are more likely to rent than to own.
In other words, not only is there a demand for apartments, the demand will increase in the years to come. This is why investing in apartment buildings can be a great opportunity for investors that are looking to buy & hold real estate. The vacancy rates in apartment buildings are low. Even if you have certain units vacant, you have other units covering the expenses of the vacant units. Apartment buildings are a better investment than single unit family homes because if you have a vacant single family home, You have to pay the expenses out of pocket until you find a new tenant.
In order to maximize our ROI, the expenses must be managed very delicately. The advantage of investing in apartment buildings is that unlike single unit family homes, apartment buildings share the expenses between the units. For instance, in building with four units, the roof is shared. You have four income producing units with individual cash-flow covering the cost of a single roof. On the other hand, imagine having four single family homes. What are the chances of having to repair any of those four roofs in the next 5 years? This is a simple example of how it makes sense investing in apartment buildings as they enable you to spread the expenses over the multiple units.
Single-Family rental VS. Apartment building?
If you had 40 K to invest in real estate right now, and you had to decide to invest in either two single family homes OR one single three-unit apartment building. What would be your pick?
At any rate, perhaps while reading, you were thinking? Cristhian, investing in apartment buildings makes sense! But they must be more expensive than a single family home! Right!? Of course in most areas they are! But remember is all about location! Location! Location!
Let me share a little story
When I first started dreaming about owning apartment buildings, I did a whole lot of research! I learned about Cap Rate, NOI, Pro forma, Expenses, etc.! I looked everywhere! For properties that were under 250 K (I was pre-approved at the time). After looking all over loopnet.com, I could not believe! I found a three-unit apartment building for 145 k! in Hagerstown Maryland. I had to do more research! The more I looked for apartment buildings in Hagerstown, the more surprised I became! How is it possible to have a 7-unit apartment building under 300 K! Impossible!?
Long story short, I found out that RG REALTY INC, not only dominates commercial & Multiunit apartment buildings in downtown Hagerstown. They are an independent company, Not a franchise! They truly dominate the marketplace; all you have to do is google “commercial real estate in Hagerstown” You will find us everywhere! Unbelievable level of success! I had to be involved! I decided to join them to learn and help them grab even greater marketplace! Within Hagerstown and surrounding areas! Could not be happier!
If your goal is to become financially free one day (hopefully before 65), real estate investing can be a great path to follow. Whether you are a beginner or an advanced real estate investor, you will benefit greatly in learning about investing in apartment buildings. There are opportunities everywhere! You just have to educate yourself and find people that are like minded with the same goals and visions! At any rate, if you are interested in learning, seeing and looking for deals in Hagerstown? Check out the link below, it will take you to the apartment buildings currently in the market in downtown Hagerstown!