First time apartment building buyers often approach their new investments using an analysis that only takes into consideration the first few years of ownership .This is a big mistake as it doesn't take into account that apartment buildings see a great investment profit over a longer term.
I would recommend that when doing an ROI analysis, you consider holding the property for at least 5 years to see a decent profit on it. It is important to keep in mind, that if you buy your multi-units in good areas and keep the property in good condition, you can increase your rent annually, thereby increasing your ROI. The value of the building is based on your net income so whether the income increases or the expenses decrease, you will still be making money on them.
When thinking about investing in an apartment building there are 3 factors that you should keep in mind that contributes to the profitability of an apartment building investment which include the following:
The amount of appreciation in the real estate value over a period of time
Leverage controlling a high value investment with relatively little money.
The loan balance and how long it will take to pay it off ( amortization)
Multi- unit properties also make an excellent source of income as well because you have multiple renters under one roof but only one building you have to maintain.
Buying an apartment building for your portfolio is a great way to beat the ravaging effects of inflation. Many intelligent investors are flocking to the apartment buildings. Apartment buildings are a great investment in a recessionary economy because people will always need a place to live. And as you know foreclosures around the country are at a record level. Along with families that are abandoning their homes, there are those that do not have the down payment to qualify for a mortgage, apartment living offers them an excellent alternative.
More millionaire have been made investing in apartment buildings. The benefit of having owning multi-units is that the more tenants you have under one roof, the easier it is to absorb the tenant turnover and spread the expenses such including your loan, real estate taxes, insurance, utilities, and other maintenance expenses.
if you know what you are doing, buying and improving and then selling an apartment building can be one of the surest ways to make a large profit in real estate.