3 Reasons Why Apartment Investing is the Best Strategy

[Danny Randazzo]

Apartment investing is a strategy used by many people to protect and build wealth. Based on my experience investing in the stock market, company sponsored 401-K, single family real estate, and other business opportunities I have found 3 reasons why apartment investing is better than the rest.

Check out the 3 reasons and you may learn something new that opens your mind to the benefits that apartment investing can bring you and your family.

1. Cash Flow Distributions - By having consistent income generation and diligent expense oversight, apartment investors can receive monthly cash distributions directly to their bank account to buy groceries, pay bills or save up to take a family vacation. The apartment industry typically pays an 8% annual distribution compared to the stock market with a 3% or 4% annual dividend and that's only if you buy a stock that pays a dividend.
   
2. Depreciation - People are always looking for ways to reduce taxable income and not pay as much money to Uncle Sam. The IRS allows real estate investors to reduce taxable income by using depreciation when an investor receives a K-1 tax form at year end. Below is an example of depreciation loss for one year based on a $100,000 apartment investment.
   
   
3. Forced Appreciation - Apartment communities are valued based on the amount of income they generate on an annual basis compared to single family real estate which is valued based on what the house next door sold for. When a property is improved by renovating the interiors of each apartment and exteriors of the building and community the property can charge a higher rent price per month and increase the income it generates on an annual basis. By generating more income the value of the apartment goes up and by up it can increase by millions of dollars.

[Danny Randazzo]

@Yonah Weiss great point. How much bonus depreciation can apartment investors plan for when a cost seg study is done?