Let’s say you bought a condo for $150,000 and rented it out. First, you would most likely have a negative cash flow because rents are not high enough to cover the expenses on the condo. No problem, you say. “I’ll make it up with the appreciation and make the money when I sell it.” Sounds great, right? Not so fast. With a negative cash flow on a typical condo you would have to pay about $9,600 per year to keep your condo. And, that’s including the rent you receive. The condo would probably appreciate at a rate of 4.5% per year on average. After ten years you could sell it for about $230,000. After selling costs and paying off the balance on the mortgage you would have $114,000 left over. Still think you made money? After all, you have $114,000 cash in your pocket. Well, you paid a total of $117,000 over the ten year period in caring costs. That’s a loss of $3,000! That’s not even the worst part. Your $114,000 is only worth $80,817 after factoring inflation. That’s a real loss of $30,000 in purchasing power.
What’s the answer? Apartment buildings. Investing in multifamily apartment buildings produces positive cash flow every month, putting money in your pocket each and every month. In addition, the property appreciates as well. When you sell, you will make a large gain. Add the cash flows and the gain on the sale, and you have a formula for success with returns far in excess of inflation. To learn more about multifamily apartment building investing visit The G-Organization.
Where do you put your money in these turbulent times? The stock market can be volatile and unpredictable. To properly invest in stocks you must do your homework and understand the stock market. Residential real estate is subject to major booms and busts. It’s at the mercy of speculators and nowadays seems more like the stock market than real estate. Furthermore, single-family homes rarely are profitable investments and the rental income doesn’t cover the mortgage, taxes or the insurance. So, where then should a risk adverse person place their money for stable and above average growth? The answer is multifamily real estate.
Apartment buildings located in good markets provide some of the best and most stable returns of any investment. Apartments have a long track record of having the highest risk-adjusted investment returns compared to other property types. These multifamily properties function more like a business rather than a piece of real estate.
A business has revenues and expenses. At the end of they day a good business turns a profit, in cash. As it grows its cash, the value also grows and creates wealth for the owner. Multifamily real estate is the same. Having many apartments in one building is like having your own captive market place where the customers must buy from you every month. You pay your expenses, and make a profit in cash that you can take out of the business to use in anyway you please, the proverbial passive income.
As your rents go up and your apartment building becomes more profitable it’s value increases and you create significant wealth through capital appreciation.
What does this mean to the investor? Apartment buildings provide a constant cash flow, like a profitable business. They generate above average returns over time creating wealth for the investor. Multifamily properties also protects against inflation. Many people underestimate the destructive power of inflation; it is to gradual for most people to notice, but the effect is incredibly powerful.
What does this really mean to the investor? Financial freedom. The freedom to receive a consistent spendable cash, the freedom from the ups and downs of the stock market, and the freedom to live your life free of financial worry.
For more information on investing in multifamily properties please contact The G Organization specialists in apartment building investing
The first question you must ask yourself before undertaking any investment is whether you are an investor or a speculator?
It’s a very simple but profound difference. Investors buy businesses or assets with earnings and the expectation that over time those earnings will increase. Speculators, on the other hand, trade only price movements in hopes of selling at a higher price to other speculators in a short period of time.
To be successful in the long-run you need to be an investor. Speculators sometime win big, yet they lose often and often lose big. Investors however, have a much higher probability of success over the long run and have the most powerful concept in investing on their side, compounding. Learn more at The G Organization.