鈥婽he best case for buying apartment buildings ever!!

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鈥婽he best case for buying apartment buildings ever!!

Tristan Cortez
Rental Property Investor 路 San Antonio, TX 路 Member since 2015 路 272 posts 路 50 votes

A while back I heard Del Walmsley on the radio talking about why apartment buildings are the best type of real estate you can buy. I can't remember the exact details but here's the summary:

-Most young people want a place to live besides their parents. They are usually fresh out of college with lots of debt--- that means they can't afford a mortgage.

- Why buy a house you have to all the work on yourself (mowing the lawn, watering the grass, etc) when you could live in an apartment building with an on-call maintenance man to do the work?

- Why live in a house when you can live in apartment building that (in some cases) has a pool, theater, hot tub, gym and many other amenities?

- Living in apartments will/are becoming more popular because of above facts.

I agree with Mr.walmsley's statement, how about you?

Do you have anything to add to this list or do you disagree?

Thanks for your input!

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Mark AinleyBusiness Member
Property Manager 路 Roselle, IL (Chicago Suburb) 路 Member since 2013 路 2k+ posts 路 1k+ votes
11y

@Tristan Cortez

I can argue this one both ways.....multi family vs SFH and I do own/invest in both in Chicago. The one fact that excites me about SFH and pushes my mind away from Multi Family is with a SFH your appreciation is never maxed out by a Cap rate. A SFH may appreciate much higher because an owner occupant may be willing to pay a much higher price based on the desire to live in that house in that area down the road and with a Multi Family your increased property value is capped by the standard rtn that type of asset may be getting at that time in that area.

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  • Account Closed
    Property Manager / Real estate investor 路 Lynchburg, VA 路 Member since 2014 路 37 posts 路 6 votes
    11y

    I'm a property manager in a college town and I can tell you that finances are probably the main reason most people live in apartments. 

    Some however have lived in homes before and no longer want the responsibility of taking care of all the maintenance issue, some people are just getting older. Some people get job transfers, some people have lost their homes do to various situations i.e. divorce, fires, bankruptcy, etc. So I completely agree with you that apartments or any other type of low maintenance multi-families are the future. 

    The issue for people that realize that apartments are better than other types of RE investments (in some areas) is they may not have the finances, knowledge, or support to secure said communities. Something I learned about life is that most things are cyclical so if the deal is ready and you aren't, prepare for when it comes back around. 

    Thats what I'm doing now...

    2Reply
  • Tristan Cortez
    OP
    Rental Property Investor 路 San Antonio, TX 路 Member since 2015 路 272 posts 路 50 votes
    11y

    Well said @Account Closed. 馃憤

    0Reply
  • Christopher Telles
    Investor 路 Irvine, CA 路 Member since 2015 路 373 posts 路 205 votes
    11y

    I tend to agree with your analysis. I'll also add some additional commentary.

    In the metropolitan markets across the country we're seeing young educated professionals wanting to live near the area in which they also work. This "gentrification" of urban core areas is having a dynamic impact on real estate. 

    With the higher cost of land in metropolitan markets the affordability litmus test leads many int to renting Vs buying. And this is not only for the young alone. Many urban core professionals who are from the baby boom generation and also formerly lived in the suburbs are finding their lifestyle improves when they can remove their formerly tiresome commute from the daily grind. They're also finding it convenient to be close to public transit, entertainment venues, sports complexes, gourmet restaurants, and museums.

    We see this across the country from Brooklyn, NY to Chicago, to Los Angeles. These metropolitan gentrification cities are seeing a revitalization of their urban cores. In my market, Los Angeles, the development of the Stapes Center has had a dramatic impact on real estate. We've seen enormous amounts of large scale development in terms of housing and general commercial to support the influx of new city inhabitants. 

    I'm of the opinion this trend is still in its infancy, and future development to live in and near work centers will continue to proliferate throughout metropolitan markets. We've looked at multiple projects of a mixed use nature for many of these reasons. We've yet to pull the trigger on any acquisitions in the urban core, but its just a matter of time before we deploy resources and efforts into buying existing or creating a new development. 

    3Reply
  • Tristan Cortez
    OP
    Rental Property Investor 路 San Antonio, TX 路 Member since 2015 路 272 posts 路 50 votes
    11y

    @Christopher Telles Great Point!

    0Reply
  • Mark AinleyBusiness Member
    Property Manager 路 Roselle, IL (Chicago Suburb) 路 Member since 2013 路 2k+ posts 路 1k+ votes
    11y

    @Tristan Cortez

    I can argue this one both ways.....multi family vs SFH and I do own/invest in both in Chicago. The one fact that excites me about SFH and pushes my mind away from Multi Family is with a SFH your appreciation is never maxed out by a Cap rate. A SFH may appreciate much higher because an owner occupant may be willing to pay a much higher price based on the desire to live in that house in that area down the road and with a Multi Family your increased property value is capped by the standard rtn that type of asset may be getting at that time in that area.

    [email protected]630-781-6744Podcast Guest on Show #72
    GC Realty & Development LLC4.61078 Reviews
    WebsiteView Page
    4Reply
  • Christopher Telles
    Investor 路 Irvine, CA 路 Member since 2015 路 373 posts 路 205 votes
    11y
    Originally posted by @Mark Ainley:

    @Tristan Cortez

    I can argue this one both ways.....multi family vs SFH and I do own/invest in both in Chicago. The one fact that excites me about SFH and pushes my mind away from Multi Family is with a SFH your appreciation is never maxed out by a Cap rate. A SFH may appreciate much higher because an owner occupant may be willing to pay a much higher price based on the desire to live in that house in that area down the road and with a Multi Family your increased property value is capped by the standard rtn that type of asset may be getting at that time in that area.

    I would tend to agree with your sentiments in general. However, one of the best ways to circumvent the CAP rate dilemma is to buy value add or opportunistic multifamily properties. These are not always readily available, but when they become available they could turn out to be terrific buys.

    I've always focused on value add and opportunistic investments in commercial, but having developed an interest in MF recently I've started to uncover more and more MF value add properties in the markets we're focused on for acquisitions.

    Buying them requires more hands on commitment other than simply management, but the value enhancement can be significant. 

    1Reply
  • Tristan Cortez
    OP
    Rental Property Investor 路 San Antonio, TX 路 Member since 2015 路 272 posts 路 50 votes
    11y

    @Mark Ainley @Christopher Telles 馃憤

    0Reply
  • Wendell De Guzman
    Investor 路 Chicago, IL 路 Member since 2013 路 2k+ posts 路 1k+ votes
    11y
    Originally posted by @Mark Ainley:

    @Tristan Cortez

    I can argue this one both ways.....multi family vs SFH and I do own/invest in both in Chicago. The one fact that excites me about SFH and pushes my mind away from Multi Family is with a SFH your appreciation is never maxed out by a Cap rate. A SFH may appreciate much higher because an owner occupant may be willing to pay a much higher price based on the desire to live in that house in that area down the road and with a Multi Family your increased property value is capped by the standard rtn that type of asset may be getting at that time in that area.

     I agree with you Mark.

    To me SFH's are like pigs. I slaughter them for appreciation :)

    MFHs are like cows. I milk them for the cashflow.

    Of course, @Ben Leybovich hate SFHs in some middle of nowhere towns in Ohio. Cheap "pigs" are cheap for a reason :)

    0Reply
  • Account Closed
    Rental Property Investor 路 Friendswood, TX 路 Member since 2010 路 663 posts 路 508 votes
    11y

    Apartment buildings are great......  that is until you come across mobile home parks.  They run lower expenses, trade at higher cap rates, and you offer a service of affordable housing. Americans are in need of affordable housing more than ever right now.  If you look at how fast apartment rents are rising relative to what mobile home parks offer for their pricing, I believe it is an easy choice.  

    3Reply
  • Tristan Cortez
    OP
    Rental Property Investor 路 San Antonio, TX 路 Member since 2015 路 272 posts 路 50 votes
    11y

    @Wendell De Guzman 馃憤

    0Reply
  • Crystal SmithPro Member
    Moderator
    Real Estate Broker 路 Chicago, IL 路 Member since 2014 路 2k+ posts 路 1k+ votes
    11y
    312-681-7487
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  • Account Closed
    Investor 路 Chicago, IL 路 Member since 2015 路 20 posts 路 5 votes
    11y

    When I was seeking advice about where and what types of property to invest in, one old saying stuck out: everybody has to live somewhere. It's true in an obvious way, but also more subtly. I try to be open to opportunities and not focus on one type of property vs another.

    1Reply
  • Tristan Cortez
    OP
    Rental Property Investor 路 San Antonio, TX 路 Member since 2015 路 272 posts 路 50 votes
    11y

    Thanks for all your great posts!!馃憤

    0Reply
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