Money is an important resource, but no one has the assurance that they can earn a stable amount of income throughout their lives. Preparing for the future is one of the reasons why more and more people are now choosing to invest. This endeavor allows you to stay ahead of inflation, help you build wealth, and meet your short and long-term financial goals.
Once done properly, investing can become your platform to achieve financial stability, but with the number of investments available today, do you have any idea which one is the best for you? Do you know the different types of investments and the pros and cons of each? Investing can be very rewarding, but one should proceed with caution as this endeavor can also become very risky, and when not managed properly, can result in debt and bankruptcy.
So Why Should You Invest In An Apartment?
If you want to avoid risks, and eventually enjoy the benefits of investing, start looking for investment property options. Buying an apartment is a smart investment because of the following reasons:
Any type of investment will require you to spend money. Depending on the type, you might need to spend a few hundred or even millions of dollars before you can successfully invest and earn money from your investment. For people who are already financially stable and would want to expand their earning opportunities, spending this much might come off easy, but for individuals who are investing for the first time, spending millions can be risky. You're basically testing the waters and don't have the assurance that what you're spending on can provide income in the future.
If you're hesitant in spending a large amount of money for your first investment, buying an apartment can be an excellent option for you. Apartments are usually cheaper than other types of investments, making it an affordable entry point for investors who have limited financial resources or are neophytes in investing. You could start off with a small apartment (usually, a classic six apartment that consists of a formal dining room, living room, and two full bedrooms) and then invest in a bigger apartment if the first investment was fruitful.
Aside from being able to invest easily, the affordability of an apartment also means more investment options and fewer risks among investors. There are countless apartments available in different parts of the world today, each having different prices and features, making it very easy for investors to buy one that fits their budget. Because of its price, investors can also have the option to buy several apartments simultaneously in order to spread their risks and expedite the process of creating a diversified portfolio.
2. Mass Buyer Appeal
There are several types of living arrangements homeowners can choose today. Depending on the number of occupants and their budget, they can choose to live in a single-family detached house, bungalow, cabin, condo, or townhome. But unlike these options, apartments are better investments because they are very popular for different types of buyers - this living arrangement is appealing for first-time homeowners, downsizers, and even other investors.
As mentioned, apartments now come in a wide variety of options, allowing buyers to find one that fits their needs. The appeal of apartments will make it very easy for you to sell your investment in the future or haul in tenants from the mass market. This status quo will make it very easy for you to earn profit from your investment - whether it's from selling your property or having it rented out in.
Moreover, the diversity of apartments can level out the playing field, allowing you to stand out against the competition. For example, if there are already several apartments being rented in your state or country today, you can take note of the features lacking from these properties and choose to focus on providing them though your own apartment. If the apartments being rented out are usually too small for couples, you can invest in a larger apartment so you can cater to this market.
3. Dependable Income Stream
One of the most obvious reasons why people choose to invest is because they want to earn a stable income in the quickest time possible. They are willing to spend a large amount of money in an attempt that this amount will multiply in the future. You will experience all of these things when you choose to buy an apartment and turn it into a rental property.
Unlike other types of investment, an apartment can provide a dependable income stream because this asset is usually secured by at least nine to fourteen-month leases. As long as you were able to house responsible tenants, you can have peace of mind knowing that you will enjoy a regular income stream and produce a positive cash flow every month.
If you want to earn more money, you can also choose to have your apartment rented short-term by using services such as Airbnb. Even without any long-term tenants, you can still earn money from vacation stays using these services.
4. Better Control
While some people are confident in letting other people handle their finances and investments, some would want to pay close attention to it. The latter usually includes individuals who are investing for the first time and would want to monitor their investments as often as possible. If you're someone who belongs to the latter, buying an apartment is a great option.
Investing in an apartment allows you to have better control because you'll get to choose what type of property to invest in, how much you'll charge for the rent, and which tenant will you accept in your property. You can even choose the location, neighborhood, and features of the apartment you'd want to rent out.
Aside from these, investing in apartments will also give you full control of how you'll maintain and manage your property in the long run. Do you want to cater to larger families in the future? You can hire professionals and have your apartment renovated to add more space. Do you want to earn more by increasing the rent of your tenants? Invest in newer fixtures or appliances in your apartment. You'll also get to decide how your apartment should look and what rules your tenants should comply with.
5. Appreciation Of Asset Value
More often than not, you exert a lot of time and effort to produce the amount of money you'll spend on your investment. Usually, you saved money for years just so you can afford to invest - and spending all of your hard-earned money for an investment that will only lose its value in the future can be frustrating. Depreciation is one of the worst nightmares among investors.
You won't have to worry about depreciation when you choose to invest in apartments. On the contrary, this investment can provide excellent appreciation, which means that its value will increase over time. As long as you maintain your property, you'll have the opportunity to increase your tenants' rents and earn more every month, and retain the value of your investment in the long run. In some cases, a well-maintained apartment can be sold at a price higher than your purchase, allowing you to earn a higher return of investment.
Some of the most common maintenance you should follow to achieve this goal is to ensure that all of the fixtures in your apartment are working properly, and any minor repairs are performed as soon as possible. Hiring a quality and experienced maintenance team can also help you provide safe and clean apartments.
6. Tax Benefits
Although the money you'll pay for your taxes can help pay the salaries of the local government workers and ensure that the roads you travel on are safe and well-maintained, paying for these can often lead to financial stress. This is especially true if you're a frugal individual who wants to save as much as possible.
Experiencing countless tax benefits is one of the most obvious reasons why more and more individuals are choosing to buy apartments. Generally, all real estate owners can experience tax deduction on their interest on mortgage and credit cards that were used to purchase the property. As an apartment owner, you can also get tax deductions from paying insurance, maintenance repairs, travel expenses, and property taxes. All of the money you'll save from these exemptions will surely contribute to your financial dependency and stability.
7. Build Up Your Portfolio Quickly
If you're looking forward to becoming an investor in the long haul, having an investment portfolio is necessary. This enables you to spread capital across different investments while helping you protect your capital the moment one investment doesn't perform well.
Work With Pros|
If this is your first time to invest or to dive into property investing, consider paying for the services of a financial advisor. Although expensive, paying for their services can be cost- effective in the long run as you'll avoid committing expensive mistakes and ensure that your investment is actually heading towards financial growth and stability.