Thursday, August 2, 2012

Create True Passive Income & High Cash Flow with Apartment Investing

You can truly create high passive income and high cash flow through investing in apartments.  ANd for the same investment you can make so much more than you can over single family homes.

Let’s look at a simple example:

Imagine if you were to buy a $250,000 single-family rental house. That $250,000 house may rent for somewhere in the neighborhood of $1,500 per month. The underlying mortgage on that house may be somewhere between $1,000 and $1,400 per month. So you may end up getting between $100 and $500 per month in positive cash flow.

Now, let’s take a look at a similar investment from a commercial standpoint. That same $250,000 investment may end up getting you a 10-unit apartment complex, which comes out to $25,000 per unit to acquire the property.

Let’s say each of those units were two-bedroom apartments, which could rent in most areas of the United States anywhere between $400 and $600 per month. For simplicity’s sake, let’s use an average of $500 per month. At $500 per month times ten units, you’re bringing in $5,000 per month – more than triple the rent that you could expect to get from that same $250,000 single-family house. Your underlying mortgage payment would be very similar to what you would expect on a residential property; for this example, let’s use $1,400 per month.

Your cash flow on this 10-unit apartment building will be $3,600 PER MONTH ($5,000 per month income, minus $1,400 mortgage payment). Now that will make a difference in just about anyone’s life!

In fact, if you wanted to GIVE AWAY one apartment to an on-site property manager, and maybe pay them a few hundred dollars a month for part-time help, you’d have your property working on auto-pilot and you’d STILL be making thousands per month –- true passive income!

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