By: Brain Gordon & Vincent M. Medina, Owners of Lotus Property Services
Why Investing In Apartments Is A Smart Move!
Why would you invest in anything else other than real estate, and better yet, other than apartment buildings? Perhaps a stock broker might have a different opinion but we are not looking at Wall Street stocks here, we are looking at investing in apartment buildings. Since the great recession hit in 2007 we have more renters in the United States than ever in American history and if that is not proof enough, even Wall Street has jumped on board, investing in the rental housing industry. America is now a renter nation with 35% of Americans renting according to the National Multi-Housing Council. That means 110 million Americans are currently renting their residences.
This also means job security for landlords and an even brighter future for the apartment rental industry! In life and especially in investing, you can never be 100% certain as to whether or not an investment will be a bad, good or great investment, however, the more you research and better educated you become the better investments you will make. A wise man once said a “A dumb investor will make a mistake and never learn from that mistake, a wise investor will make a mistake and learn from it, and a smart investor will learn from others’ mistakes”. Some investors have gotten lucky over the years but as the saying goes “Even a broken clock is right twice a day”. As a smart real estate investor, you have to know the difference between a lucky investment purchase during a real estate boom and a precise, skilled and well executed real estate investment purchase.
A skilled investor will learn when to sell and get the most for their investment and when to strike when the iron is hot and make a skilled purchase with the ability to maximize growth, security and bottom line: put more money in their pocket. That is the key!! You may ask “Why then invest in apartment buildings?” The answer is quite simple when you do your research. Look at the history and performance of apartment buildings over the long term and you can see steady growth and solid returns.
Chances are you are already in the apartment industry if you are reading this article, and although the apartment industry may be tough at times, owning an apartment building has more than likely been one of your good investments in life if not perhaps your best investment. While it is impossible to build any new land in Southern California, population growth is steady, with lower income jobs becoming the norm for many Americans, renting an apartment has become the only game in town. For those of us landlords in the business, this current economic climate only goes to solidify the fact that apartment buildings are a sure bet and stable place to park your capital.
Recent U.S. Census statistics show that Generation X (ages 30 -44) makes up 42% of American renters. In addition, people under the age of 30 are now starting to make up over 50% of our American renter population. As you can see here, we have two new generations of renters hitting our market, prepared and ready to rent our units. As apartment specialists always involved in current market trends, we’re constantly researching and studying our local, national and global economies. Our forecast indicates that apartment owners are definitely in the right business with current stability and more growth on the horizon.
“We are the Trillion Dollar Apartment Industry” as noted by the National Apartment Association’s statement. This business is alive and ever changing, therefore it is imperative that you have a connection to a brokerage that is deeply rooted in the daily workings of apartment management. Don’t be misguided by amateur agents or brokers who are superficially involved in the business through mere phone calls and shallow sales pitches because, for those of us who are engrained in the industry, we understand that this is not the game for everyone and it is certainly not the same industry of 20 or even 10 years ago.
Today’s fast paced apartment rental industry has become more hands on than ever before, requiring more diligence and expertise to horde off predatory attorneys, frivolous litigation and keep pace with new laws and regulations that we have seen on the rise in recent years. As an apartment owner, it is now imperative that operational reviews of your business practices be made regularly, and legal updates every 6 months to a year to insure your investment is properly protected,
prepared and seasoned for growth.
With Apartment sales prices seeing maximum growth over the past few years, many investors are cashing in on this market or exchanging low performing investments for properties with a better future and more potential for increased income and growth. If you are an active real estate investor, this is the time for you to make your move as this market calls for a calculated game plan that will help you cash in on equity, leverage low cost lending and build long term stability for you and your generations to come. Do yourself a favor and be a “smart” investor.
Brian and Vincent are “The Apartment Specialists”, owners of Lotus Property Services, Inc. and are active leaders and Real Estate Brokers in the apartment industry. Since introducing Lotus Property Services, Inc., the company now oversees a real estate portfolio of over $300+ million dollars in value which in part has been accomplished by Brian & Vincent’s commitment to quality and service. Together Brian & Vincent have sold and managed over one billion dollars in real estate assets. As former Presidents and Board members of apartment associations, frequent writers for numerous industry magazines, key note speakers for seminars and investment groups such as the Value Hound Academy, Brian and Vincent have earned the title as the undisputed “Apartment Specialists”.