For the person that is in their forties or fifties, investing in multi-family apartment buildings can be a greatly profitable endeavour. Most people wait until later in life to invest in real estate income properties, and some would say that’s because younger or middle-aged people tend not to think too much about the far future, which is a generalization at best.
The fact is that it’s actually more difficult to invest later on in life, because of the many responsibilities, less time and greater risk. This means that the sooner you start investing the better off you will be later in life. To fully understand a particular investment opportunity, it is important to discuss your objectives clearly with your agent, tax advisor prior to making any investment.
Why Apartment Buildings?
Apartment investments offer relatively low risk, along with the ability to keep pace with inflation. This allows for the potential to increase income as the market rises. Apartment investing also enables owners to produce both cash flow and equity appreciation returns. Investment returns are generally proportionate with risk level. Higher returns may be generated by higher risk property types or by accepting less favourable locations.
One of the reasons that a multi-family dwelling investment is more suitable for middle aged investors, rather than younger investors, is because the average down payment required for investing in apartment buildings is approximately 30 percent of the purchase price of the building. A larger down payment is generally considered to be something that is difficult to come up with if you are in a younger age demographic. .
Managing the Investment
There are many ways to approach the management issue. Some people prefer to manage things themselves, while others feel their time is better spent elsewhere, and turn the work over to a professional property management company. It is safe to say that any building with 20 or more units will support the cost of professional management and a live-in manager. Anything smaller than that only requires a manager to perform routine maintenance tasks, leasing, and banking.