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Why I Switched To Apartment Real Estate Investing



Making the switch to apartment real estate investing from single family homes changed my life. And thankfully, that change was for the better. Especially when it came to my monthly passive income. In fact, I went from earning nothing from my real estate business, to earning well over $5,000 per month (it varied from month to month) from my first apartment building investment.

So if you haven't guessed yet why I switched to apartment real estate investing, it was CASH FLOW, pure and simple. I needed it, and apartment investing provided it.

You see, my first forays into the real estate investment game were focused on single family homes. The investment objective was to hold the properties long term, and with any luck, eventually sell them for a profit. The "problem" was, that plan did not provide any monthly cash flow. And I learned quickly that "future profits" didn't pay "today's bills".

Aside: Lest I leave you with the impression that you cannot succeed in real estate investing using the buy and hold strategy, I want to make it clear that you can. In fact, in the past few months alone I sold off two of my original real estate investments (both single family homes), both for a profit. My partner and I had held the properties for over ten years and earned a profit of $150,000 (split down the middle) from the sales. But even though those properties were profitable in the long run, they did not, in general, generate any positive cash flow over the years that we held them.

Unlike apartment real estate investing, generating positive cash flow from a single family home investment is very difficult to do if you use any significant leverage (ie. debt) to purchase the property. Most folks who invest in single family homes shoot for "break-even" cash flow (after making the debt payments and paying expenses) and plan on profiting from appreciation in the future.

Apartment real estate investing on the other hand holds great potential for generating positive cash flow. When purchased properly, apartment buildings can generate significant passive income for their owners, even when they are highly leveraged.

The key word above, in case you missed it, is passive. I have been investing in apartment buildings for over 15 years now, and every month I earn a passive income from those investments. In other words, I do not "work" for that money. It simply arrives in my bank account from my property managers whether I am in my office or on vacation.

Now that is a real business!

A "real business" is one that runs on its own without any hands on involvement from the owner(s), and still generates a profit. Based on that definition, apartment properties make great "businesses".

Not convinced? Here is just one example of an apartment building I own that is 100% financed, and generates over $3,000/month in passive income for me. (And this figure will jump to over $5,000 once I refinance it in a few months.

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