How to Invest in Apartments
A small apartment building is a good place to start out.
If you’ve ever wondered what it would be like to cash rent checks instead of writing them, apartment investing might be for you. While most people can’t run out and buy a big 200-unit apartment complex, you can get started in apartments without coming up with millions of dollars. Whether you buy them through the stock market, find a great deal on the private market, or even live in your own building, apartment investing is within your reach.
If you have money to put in the stock market or into mutual funds, you can shift some of it to buying pieces of apartment buildings. A real estate investment trust called a REIT, is similar to a mutual fund. Instead of buying shares of a stock portfolio, when you buy shares of a REIT, you’re buying a little piece of its portfolio of investment real estate properties. While there are general-purpose REITs, you can also expose yourself to the apartment market by buying shares in a REIT that only holds multi-family assets. You won’t have the control of owning your own building, but you’ll be able to participate in the downs and, hopefully, ups of the apartment market.
Tenants In Common
When you buy into an apartment building as a tenant-in-common, you’re buying a small piece of the building together with other people. Pooling your money lets you afford a building that you wouldn’t otherwise be able to afford. If you’re considering a tenant-in-common investment in an apartment building, read the agreements carefully so you understand the fees you will have to pay, the responsibilities you will have to contribute money to if something goes wrong, and the terms under which you can sell your interest. While tenant-in-common investments can have high fees and restrictions, a good one can be a good way to get started in apartment investing.
Buying a Small Building
Going the traditional route of coming up with a down payment, going to a bank for a mortgage, and competing to buy an apartment building is challenging. You might find that brokers with “good” deals don’t call you back, or that the bank’s paperwork and requirements for a down payment are out of your reach. Instead…
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