Book excerpt from Invest in Apartment Buildings: Profit Without the Pitfalls

Invest In Apartment Buildings

Profit Without The Pitfalls




It’s tangible, it’s solid, it’s beautiful. It’s artistic, from my
 standpoint, and I just love real estate.
—Donald Trump

Ownership Benefits

There is a caveat for this chapter before we jump in. I get right into the challenges of investing in apartment buildings. I leave no stone unturned. I do so because I want you to be fully informed on all aspects of this exciting investment. The good, the bad and the ugly. There are some horror stories. Stories that may make you sit back in your chair and think, “Whoa! Not so fast! Maybe I don’t want to invest in multifamily properties.”

You know what? That’s exactly what I want you to think.

I want you to think long and hard about the fact that buying an apartment building is more like buying a business and a lot less like investing in real estate. You can do many things wrong if you leap blindly into multifamily real estate investing. You can lose hundreds of hours of sleep, your “sanity” and all of your money.

Throughout this book, I’ll give you techniques for investing the smart way. I’ll show you shortcuts that will actually limit your potential for mistakes and save you a great deal of time.

As you read the stories I believe your confidence and excitement will soar. At the end you’ll find yourself saying “Yes, I can do this!” With good education and mentoring, you can do everything right. Sure, you might make little mistakes here and there but that’s how you learn.

Horror stories? Okay, my husband says that’s a little strong. Even though he has personally lived through some of these stories.

How about “nightmares?” That term might be more appropriate. After all it’s the nightmares that keep you awake at night wondering things like:

  • What am I going to do about this structural issue that suddenly appeared?
  • Why did we go from a building that was almost full to a 73% occupancy? Practically overnight? How will I make the mortgage payment?
  • How am I going to get my manager to put great tenants in my property?
  • How am I going to fire my manager when I don’t even have a good replacement?
  • How long will my reserve funds last while I turn the property around?

There’s nothing like a great success story to make these nightmares seem like something barely remembered in the past. But why even live through them? Education, good planning and great exit strategies can keep nightmares to a minimum.

That’s what this book is all about. It will help you go into multifamily investing with your eyes wide open—and keep the mistakes to a minimum.

The Advantages of Multifamily Real Estate

Multifamily real estate has many advantages over other real estate asset classes (such as single-family, industrial, retail and office). There is no disagreement with real estate gurus on this point.

On paper and in the classroom, the list of advantages to buying apartment buildings looks great. You have:

  • Creative deal structuring and financing.
  • Less competition: Apartment investing is the market “sweet spot.”
  • Stable, predictable cash flow.
  • Professional third party property management.
  • Multiple profit sources: Cash flow, appreciation, numerous tax deductions & benefits and principle pay down.
  • Benefits from economies of scale.

But it’s when you actually get in the trenches that you discover pretty ideas and broad, sweeping generalizations may not be easy to accomplish or even put into practice. Be aware of the fact that while there may be many advantages to buying commercial real estate, you can still get hurt if you don’t know what you’re doing. If it were easy, like following a recipe, everyone would be doing it. The real estate gurus will try to get you to believe that all you need to do is buy the list of ingredients, follow the directions, and you’ll have a perfect dish every time.

In this chapter we’ll take a look at these various advantages from a very realistic point of view. I want to be sure you don’t buy the guru’s sales pitch hook, line and sinker.
© Theresa Bradley-Banta
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