How to Invest in an Apartment Building – Step By Step
If you have ever thought about investing in an apartment building, you are in good company. Many investors have built great wealth by investing in apartment properties. Purchased correctly, apartments can outperform other investments for several reasons:
1) Cash Flow
You receive rent checks every single month – and the biggest cash flow comes when you sell.
2) Principal Reduction
Every month, your tenants are paying down your mortgage.
3) Property Appreciation
Purchased correctly, your property will organically appreciate over time. The real beauty of an apartment property is you can improve the value simply by increasing the Net Operating Income.
4) Tax Benefits
Rental income is one of the least-taxed sources of income. On top of that, you can sell a property and reinvest the profits without being taxed on the gains.
“People always need a roof over their head.” Again, purchased correctly, apartment properties can provide a steady, predictable source of income.
OK, let me share with you my 4 Steps to Invest in an Apartment Building:
1) Start With Your Education
“An investment in knowledge pays the best interest.” — Benjamin Franklin
I recommend you get started by first investing in your education. Even if you are simply investing through an investment group or partnership as a silent partner, I recommend you educate yourself first.
There are many great courses and books available on how to get started investing in apartment buildings. Invest your first dollars here, and they will pay dividends once you get some real-world experience.
2) Seek Out Mentors
Finding someone who is already successful and willing to teach you will be one of the best things you can do. This is true in apartment investing and everything else that you strive toward. Their real-life experience can help guide you and avoid costly mistakes – especially when you are getting started.
3) Start Small
I recommend you start with a deal you can afford to make mistakes in – because that is how we all learn. The biggest hurdle to overcome is to just get started. Do not get bogged down in analysis paralysis or thinking you need 3 years of education to get started. No textbook in the world can replace real-life investment experience, so it’s best to get started on some smaller deals and work your way up.
4) Keep Going
Once you get started, keep going. I don’t know anyone that became a millionaire from their first apartment property. Building wealth is an accumulation of activities, so once you get started, keep going.
I cannot stress enough that the best way to get started investing in apartments is to begin with your education. But do not get bogged down with your education. Be willing to get started and make some small mistakes on some smaller deals. You will learn and grow from each and every deal that you complete.