If you’re dreaming of early retirement but you’re dreading the financial planning that it requires, you may want to look into some smart investment options that can set you up for success when you’re ready to stop working.
If you’re seeking out potential ways to earn an income with little effort, you may already be involved with real estate investments. There are plenty of options, ranging from a single-family rental that you can manage and maintain to a vacation home that makes you money when you’re not vacationing there yourself. You may be considering expanding your portfolio with more of these smaller property investments, but you can really boost your rental income by opting for a larger investment–like an apartment complex–instead.
While investing in an apartment building would require more funds upfront than the other two options, it is also the most lucrative real estate investment in the long run. Keep reading for some more reasons why you should consider buying an apartment building to prepare for early retirement.
Steady Source of Income
Unlike some other investment methods, rental properties provide a stable source of income with little hands-on effort. Revenue from rental properties is considered passive income, meaning that you don’t have to put in much effort for your cash flow to continue.
This is the best option for a retirement plan because you can do some footwork now and set yourself up for easily maintained, dependable income later. When you’re finally finished putting in hours at your primary job, your rental will continue working for you. If you already own rentals, you know this is the case.
Compared to smaller rental properties, apartment buildings generate significantly more income. The number of residents allows you to collect more rent and even increase the rent exponentially without impacting your tenants too seriously.
Plenty of Financing Options
If you’ve invested in rental properties before, you may have been able to purchase them outright with little assistance. Apartment buildings obviously require much greater capital for purchase, meaning that you may need some help to get started if you haven’t set aside the funds for this kind of purchase.
Thankfully, there are plenty of resources and financial planning options to help out. For instance, you can apply for a commercial real estate loan that will cover initial expenses and protect your personal finances from your commercial dealings.
If you’d rather not take on this financial burden by yourself, you can choose to purchase with a partner or invest in syndication. In this case, you won’t own the entire property–only a portion. However, you’ll still make money and you’ll get the benefit of sharing ownership responsibilities with other investors.
Finally, investing in an apartment building boasts lower risk in several areas. Real estate investments on average are more stable than volatile stocks and other depreciating investments, but a larger property like an apartment building has its own host of benefits.
For instance, owning a multifamily property essentially eliminates the risk of vacancies and poor tenants hurting your cash flow. Even if there are unused units in your building, there will always be other tenants paying rent to ensure that you’re making money.
In some cases, single-family properties and vacation rentals could face tenant damage or long dry periods during which they make no money at all and you’re on the hook for payments and upkeep. With an apartment building, that isn’t the case. While you will still want to keep your building full of tenants, you can truly sit back and allow your investment to work for you without worry.
Investing in an apartment complex is the perfect opportunity for a seasoned investor hoping to meet their retirement goals early. Not only will the income from your property help you max out your savings, but your property’s appreciating value and consistent income will ensure that you and your loved ones are taken care of for years to come.