Have you wondered if this is a good time to start investing in real estate? Will apartments be worth more in 10 years?
Don’t worry, you are not alone!
Many people who invest their money in multi-family businesses ask the same thing. You don’t want to miss a better opportunity.
That is why this is such a big question. You ask yourself, “Is my investment good? Will my investment keep its value? “
All of these are valid concerns, but hopefully apartment buildings will do very well over the next 10 years. Here’s why.
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The big difference between apartment buildings and single family homes is how you get your profits.
Investing in single family homes is based on a lot of speculation. Home prices fluctuate from year to year depending on what people are willing to pay for the property and the market cycle.
Things are going on. But it’s also going down.
Multi-family houses, on the other hand, are more stable. It is based on both the value of the property and the rents. If you can increase the value of the property or increase the rents, you will make higher profits.
For this reason, an apartment building is often superior to a single family home.
You can more easily control the cap rate of an apartment building. By looking for ways to add value to the property, rents will go up.
And that’s a simple equation.
Rents increase = increase in value.
I recently discovered this interesting non-profit called We Are Apartments.
They have gathered data from across the United States and predict that 4.6 million more housing units will be needed by 2030.
That’s a lot of units. And that’s a lot of investment options, but you need to be careful about where you invest.
One of the reasons the need for all of these units is because the US demographics are changing. People are moving away from big cities like New York, Los Angeles and San Francisco. The same people then move to places like Atlanta, Denver, and Salt Lake City.
In addition, many people are moving away from the suburbs and rural areas and moving into apartments in the emerging cities.
This means that many new tenants are moving in and there is a lot more money to be made.
The Fed prints money
Since the 2008 recession, there has been 2.5 times more cash in circulation.
This means that the Federal Reserve has printed so much money that there is more than twice as much money in circulation today as it was a little over a decade ago.
This comes from the large deficit spending on both political sides without much fiscal responsibility. I’m not saying this is right or wrong, just that a lot of money is being printed.
And with our current and future COVID-19 issues in mind, this will only continue like this.
Great, the government prints money. What does this mean for my investments?
Well, the more money there is, the higher the prices for everything.
Yes i can say you are ahead of me That’s inflation. But just because your coffee doesn’t cost you a quarter more doesn’t mean you can’t benefit from inflation.
When you have a real, physical asset like apartment buildings, its value usually increases with inflation. This means that as the prices of goods go up, so does the value of your investment.
Construction costs rise
But that’s not the only way inflation affects your investment.
With inflation, goods cost more and services cost more. Hence, everything you build will cost more.
In fact, it is already happening. According to an analysis of BLS data by Associated Builders and Contractors, softwood prices have increased 73% and iron and steel prices 15% over the past 12 months.
This means that making a deal now will only make your investment even more valuable in the future.
If you look at the combination of these factors, you can see how convincing tangible assets such as apartment buildings are. You will only grow.
There’s this old saying that I love: The best time to plant a tree is 20 years ago. The second best time to plant a tree is today.
Trade today and find opportunities to invest in deals instead of the time passing by. Look for investment opportunities or find ways to learn about the many benefits of multi-family systems.
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