By now you've read and heard about a few of the many benefits multifamily properties have over single family homes, retail structures, office buildings and the like. Perhaps one of the biggest advantages of any commercial property is PASSIVE INCOME.
Passive income is generated by an individual, usually derived from rental property, limited partnership or some other enterprise, in which he or she is not actively involved. This is what apartment investing is all about! Passive income does NOT include income from wages or active business participation. That means you're not physically doing the work yourself. Wouldn't you rather to sit at home, on the beach, take month long vacations, travel the world while your apartment building produces cash flow without you?
Creating passive income can be accomplished easily with apartment building investing and even with single family homes, however it will take more years to produce passive income from houses than it will from apartments. Single family homes rely on the rental income from the home, but if the asset sits vacant there is no income from this property at all and you may need to feed the property.
Passive income is the very reason investors start buying apartment buildings in the first place. Multifamily properties are the fastest way to create passive income so you can start doing the things you want to do instead of doing the things you have to do. Besides, if one of your apartment units sits vacant on a larger multifamily property (which you obviously don't want) at least the vanancy has been anticipated and calculated in your numbers.
A property that produces passive income continues to do so until the asset is sold. It then turns into portfolio income. If a person has more than enough passive income to cover his or her living expenses, that person is on the road to financial freedom.
Many investors think they have to start with single family homes and then "work their way up" to apartment buildings. That's just not the case. You don't need to do that unless you believe you do. It's a mindset. People are often shocked when I tell them I've never invested in a single family home. Not because I don't believe you can make money doing it, because I know you can. But I know I can make more on an apartment building. Sure, I bought my own home, but I've never bought a house as an investment. The first investment property I ever bought was a 16 unit apartment building--with no money! The nice thing about multifamily properties is that the income generated pays for all the expenses. I don't do anything. The manager is paid from the income. The expenses are paid from the income. The mortgage is paid from the income. When it's all said and done, I get what's left while the property continues to increase in value.
Passive income is what most investors think about when they get involved in real estate. Sadly, many would-be multi-millionaires exit the real estate market because their investment bought them a part-time or full-time job. It doesn't have to work that way for you. Don't overlook the power of apartment investing. It could change your life.
Wish you all the success,
Steve Steadele
About Steve:
Steve Steadele, author of the book Multifamily Millionaire, is a successful Real Estate Investor, Broker, Entrepreneur and self-made millionaire. He is a featured speaker at Real Estate Investment Associations across the country where he shares his wealth of knowledge, experience and enthusiasm for the real estate industry. Today Steve specializes in the acquisition and disposition of investment real estate throughout the United States. To learn more about his products and services, visit his Web site at www.SteveSteadele.com.
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