Why is apartment real estate a good investment?
Wed, 03/03/2010 - 20:02 — Anonymous
- Demonstrated Steady & Predictable Returns
Historically, apartment real estate has always produced solid returns. People will always need a place to live and the rent that is generated creates a predictable revenue stream Second only to cash, apartment real estate is considered a highly reliable income stream.
- Diversification
It is easier to manage a few vacancies in a 75-unit apartment building and spread out that risk among several units than it is to manage the impact of one vacancy in a single property portfolio. Further to this, buildings are spread out geographically and demographically in order to ensure that they are not exposed to one particular industry, age group, income bracket, etc.
- “Recession-Resistant” Factor
When times are bad, people don’t buy new homes, they often rent apartments to save money and keep costs low. When times are good, people move out on their own and rent their own apartment rather than living with family or friends.
- Efficiencies/Power of Scale
The bigger you are, the more units you own, the greater the efficiencies of scale. You have better negotiating power with utility companies, contractors and other suppliers than if you owned a single unit rental property.
