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Apartment building investing is often intimidating to many residential real estate investors, which is what keeps them from realizing the outstanding cash-flow and long term equity returns that investing in sound apartment properties can bring. I will discuss 5 of the most fundamental reasons that apartment investing offers such a lucrative opportunity

Reason 1: More units equals higher income potential. Just due to the nature of apartment buildings your monthly income from one successful transaction is bound to be much higher than that of a single family house. Plus, you have the advantage of multiple tenants paying rent to cover any vacancies that occur so that the financial impact is not nearly as hard when someone leaves or gets evicted.

Reason 2: Less competition. The same irrational fear of larger numbers that keeps some investors away from apartment buildings also gives the advantage to the investors who do seek the knowledge and take action in this market. It keeps the lower-level investors away from bidding on deals.

Reason 3: Less owner management. The ability to afford professional management companies is a great advantage of commercial or multifamily real estate. Because the margins are higher, it is often possible to hire companies that can take a majority of the day-to-day responsibilities away from the owner.

Reason 4: Lenders are on your side. Commercial lenders are much more sophisticated in analyzing the financial details of a multifamily transaction than a single family investment. Their main concern is whether the property will generate enough income to cover its annual loan payment. Because they have more to lose, their lenders do their own due diligence and if the numbers do not make sense, they will not make the loan. This can be good because it often saves you from making poor decisions on overlooked data.

Reason 5. Higher “return on energy.” Although it is not 10 times more difficult to purchase an apartment building, the returns can often be 10 times greater (or more) than single family homes. 25% equity of a $100,000 house is only $25,000. That same equity in a $1 million apartment building is $250,000. The “return on energy” is much higher in apartment buildings.

Now that you have these great reasons to invest there’s nothing holding you back from there. A few tools and a new basic knowledge base is what you simply need so what are you waiting for?