First, burned-out single-family landlords are one of the biggest buying groups of small apartment buildings.
They are looking for passive income, and they have gotten tired of managing houses. They have come to realize the amount of work involved in managing scattered houses, and they “upgrade” into small apartments so they can hire management companies and exit the property management business.
Think About It.
Would you rather oversee 10 houses or one 10-unit apartment building? I believe that you should never self-manage your properties and show how small apartments afford you that capability, unlike houses.
If you are currently wholesaling houses:
Landlords or house rehabbers who fix up and resell, you should definitely add small apartments to your wholesaling business. You can flip small apartments to the same investors who are buying your house deals, with bigger pay days. It’ll add a new profit center, while leveraging your existing buyer relationships. In addition, another large buying group of small apartments is small business owners, who are looking to exit the rat race.
Most small business owners come to realize:
That they do not own a business— they own a full-time job. Their business does not exist without them and they see passive income from apartments as their escape vehicle. These two groups (single family landlords and small business owners) are easily accessible. Therefore, it’s simply the matter of finding the deals, finding the dollars, and bringing everything together so everyone wins.
The Rental Market Has Absolutely Exploded!
Many can’t qualify for a home loan. It is tougher and tougher to qualify for a mortgage. In our area the homes have more than doubled in value in the last ten years and even at 5% down onan entry level home that is still $10,000 to $15,000 for a down payment.
In fact, a recent study that I read surveyed our up and coming millennials, and guess what? They prefer to rent and are planning on doing that instead of purchasing a house.
For buy and hold players:
The passive income streams from owning apartments are much more secure and much larger than they have ever been. Rents and occupancy are high and interest rates are at lifetime lows which mean that the cash flow per door is at levels unseen for decades. For wholesalers, you have the opportunity to place yourself in the toll gate position of finding the deals and matching them to the high demand from the dollars.
You can find the distressed apartment properties; inject some rehab and improved management to raise the occupancy and/ or rents and you’ll reap the rewards of forced appreciation by selling at premium prices or refinancing at higher appraised values to pull cash out. Or just hang on to the properties for great cash flow and equity creation. It’s time for you to play bigger
Leverage Every Activity!
“Real estate creates more millionaires than any other pursuit because of the leverage involved. “
There’s leverage of financial capital and leverage of human capital. I’ll explain leverage of financial capital later. Now I’ll point out how to leverage your human capital: your know-how and your time. Earlier I pointed out that most newbies approach real estate by wholesaling houses, which is fine. But, sadly, they start from scratch every single day.
In real estate investing, just like in any business, you must be more strategic. I hear many people complain they don’t have the time to do this. They do have the time – they’re just not strategic in how they use their time.
What do you think?
What else would you like to learn about that I haven’t touched on?
Leave me a comment and I will connect with you.
Here’s to your real estate investing success!