Investing in real estate is one of the proven ways to achieve financial freedom, and investing in an apartment building is one of the many ways you can get into investing. Before you make your big move, however, there are many things you need to consider. The way you decide to approach this should be determined by how much money you have, how involved you want to be, and how much time you can spare to take care of your investment. And here’s some insight for you.
Purchase it yourself
You can buy the whole building yourself. This is simple and straightforward and can be great if you don’t want to work with a partner. However, it comes with a set of challenges. This approach needs the most amount of upfront capital, which means that there’s a high risk of financial calamity. But if you are careful and do your due diligence, this can work well for you and deliver an excellent rental yield that can help you fulfil your other financial obligations as well.
Also, it should be noted that if you are a foreigner looking to buy property in another country, you will have to comply with the respective country’s laws. For instance, Sri Lanka is home to properties like TRI-ZEN, turning the country into an excellent investment hub; however, buying apartments in Sri Lanka as a foreigner is subject to a myriad of taxes.
Work with a partner
If you don’t mind partnering up with a fellow investor, this is another excellent investment strategy available to you. One of the upsides of this method is that you don’t have to bring all the money into the partnership, and one of the downsides is that you don’t get to make all the decisions.
Investing in a multifamily property with a partner or partners can be a tricky business, which is why you need to make sure that everything is well-documented.
Consider a syndication
This is an excellent way to get into apartment investing if you are unable to source all the money needed to buy the building. A syndication is a group of people that invest in a chunk of a property, and the property is owned by all the partners. However, the property is managed by the syndicator.
Real Estate Fund
A real estate fund is essentially a pool of funds used to invest in more than one apartment building. This is a gamble as you have to trust the fund manager to make the right investment decision. But all you have to do is invest in the fund, which will then be invested in a multitude of properties.
A REIT is a large company that buys and manages properties. When you invest in a REIT, you won’t be directly investing in the property; instead, you’ll be buying shares of the company. You should also know that there are both private and public REITs.
While this is an excellent way to get into investing in the real estate market, the return won’t be as good as what you would get from funds and syndications; you won’t be given any tax benefits either.
Be your own syndicator
If you have enough time, you should think about creating your own syndication. You can get people to invest in your syndication, and you will be making all the decisions.
But this entails greater responsibility; other investors rely on you to make the right investment decision and run the property. So, before creating a syndication of your own, make sure you have the time to take care of it.
As mentioned earlier, apartment investing is a surefire way to achieve financial freedom. But with the benefits of investment come a set of responsibilities. So, make sure you know what they are, and talk to a real estate advisor or financial advisor before you make the investment.