Making Cash Through Rentals
The current housing market makes you think that owning rental property is a poor investment. Home ownership in the United States continues to rise, despite the fact that interest rates are beginning to creep up and that the housing market is vastly overpriced. It would seem that everybody is buying their own home, and there aren't any renters left.
The reality is quite different. The multifamily market hasn't changed much since the housing industry began to boom. That is a good indicator that multifamily apartment buildings are a good investment, and that they will continue to be into the future. New renters continue to enter the market as young people leave home, graduate from college or get married. Most of these young adults rent for a period of time before purchasing a home, and many of those choose to be apartment dwellers.
One reason that multifamily apartment buildings are a good investment is that residential real estate prices have ballooned to the point where many people have been priced out of the market. Young people who are just entering the housing market are simply unable to buy due to inflated housing prices. In fact, some former homeowners who sold their homes at inflated prices are now unable to find housing they can afford, and they have gone back to renting. All of these are factors that have helped the multifamily rental market remain stable.
Another reason that multifamily apartment buildings remain a good investment is that so many of them have been converted to single-family units. In cities all over the country, apartment buildings have been bought up by investors and converted to condos and townhomes. This has dislocated the renters who used to live there. That is unfortunate for the renters, but it has keep the apartment rental market from getting soft.
The bottom line is that apartment building ownership has a great bottom line. You can make cash by owning and renting apartments.
There are several rental markets that you can get into. Some people prefer the adult only market, and some apartment owners cater to the family market. There are advantages to both.
One specific "apartment dweller" demographic is the young urban group. Mostly singles and childless couples, these are generally active young adults who like to live close to social and cultural activities. They demand luxury amenities, like exercise rooms, and they want their homes to be comfortable and well maintained. They tend to be financially stable, and are a great investment market. In fact, you can even sort of trade futures with these renters. The financial stability of your target group is a factor in the type of funding you will be able to get for your apartment building.
Another "adult only" demographic is the over-55 group. Contrary to our stereotypes, most senior adults are financially stable, and they are a stable target group for apartment owners. There may be specific regulations and requirements that you have to adhere to in order to provide senior housing, but providing senior housing is an excellent way to invest your money.
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About the Author:
AIM is a commercial finance consultancy service, Amir Maloumi is the director of AIM.www.aimfinanceconsultant.com