If you have ever wanted to add an apartment building to your investment portfolio, you may have wondered how to begin. Not only is becoming a landlord a complex situation, but it can also have unexpected complications that can be almost overwhelming. Most people don’t have millions of dollars to put down on an apartment complex, nor do they have angel investors with wings of gold. So, how can you invest in an apartment building without breaking your bank? Here are three tips to use.
Start Small
Look into purchasing a small two, four, or six-unit property and make one of the units your home. By making the property your home, you can use the popular FHA low-down payment finance program to purchase the structure. Renting out the other parts of the building can give you the chance to be a landlord, but on a much smaller scale than a large apartment complex of 100 or more tenants.
Pool Money
A program called tenant-in-common allows you to purchase a part of a multi-complex apartment building with a group of individuals. Pooling money with many people can offer an opportunity to buy an occupied building that can bring profits the first year. Steven Taylor landlord has owned apartment buildings for many years and believes it can be a risky investment. So, talk to an attorney before you sign anything on the dotted line.
Select REITs
A REIT is a real estate investment trust that you can purchase into just like you would invest in a group funding or mutual funds. The trust purchases a building, and you become a small owner in the multi-family unit. Using this experience to see if you like being a landlord can help you to understand the ups and downs of the market without shouldering all the negative on your own.
You can become an apartment owner, but before you make the huge plunge, check out the smaller options that are available. Try investing in a minor way before jumping into the deep.
