In my opinion, being a multifamily apartment investor is the best way to build generational wealth and earn recurring passive income. However, it’s not for everyone. In this series, I’ll give you 6 reasons why you shouldn’t invest in multifamily apartments.
You Want A Deal
In the world of multifamily apartments, as a matter of fact, in commercial real estate in general, there’s really no such thing as a low or a high price in my opinion. That’s just not how I see it. There is also no such thing as rock-bottom or expensive. These things are just unimportant to a multifamily apartment investor with the right mindset. Instead, an apartment investor that invests for cashflow and not appreciation doesn’t really focus on price. We focus on whether a deal has a low ROI or high ROI. We are focus on cashflow and return on investment, not whether the asset is cheap or not. If you’re apartment investment strategy is based on getting a deal on price or the cost instead of the benefit, then you probably shouldn’t be investing in apartments.
Analysis Paralysis
There is no substitute for knowledge. Research and education are the best ways to raise your investing confidence. However, there’s a difference between talking the talk and walking the walk. Most successful investors don’t waste time trying to be perfect or studying so that they know everything there is to know before investing. The process of overanalyzing or overthinking a deal or opportunity can paralyze your forward motion or decision making to the point that no action is taken or decided upon. This is where those who suffer from this affliction give themselves an “out” noting, “I lost the opportunity,” when in fact the opportunity wasn’t lost, it just went to someone else.
Impatience
F.O.M.O (fear of missing out) is a common investing acronym. It holds true within multifamily apartment investing. I’ve seen countless active and passive investors make big mistakes on investing in an apartment property solely because it allowed them to hit some kind of goal they’ve set for themselves, because they simply want the bragging rights of having closed a deal or to keep up with whoever the “Joneses” are in their network. The pressures to move fast, go bigger and do it cheaper is high, unfortunately many succumb to them, only to fail disastrously in the end. On the flip side, the patient apartment investor waits for the right deal by adhering to sound apartment investing fundamentals. They take the time to perform the due diligence needed in order to make a wise investment. They understand market cycles and when to act and when to go into a “wait and see” mode (which is what we’re doing right now, by the way) to see how things develop.
No Network
You’ve heard the saying, “It’s not what you know, but who you know”. If you think you can go about this apartment investing thing alone and never need anyone else’s help, advice, mentorship, connections, contribution or favor then you definitely should not be investing in multifamily apartments. Knowing experts that you can leverage in every area of a deal can increase success and mitigate risk. It literally takes a team of people to get these deals done and everyone has to be on one accord. Even as a passive investor, if you want to meet successful apartment syndicators, one way is to meet successful passive investors. In both, active and passive apartment investing your network is your net worth. In building your professional network, the key is, you have to be purposeful in your pursuits and selection. People you build meaningful business relationships with should be one’s who will bring you value and increase, and vice versa.
Seeking Alpha
Apartment investing is good for steady passive income. If that’s all you look for, you’re only halfway right. Whether you are actively investing or passively investing you want to think of it as investing into a business. Like any business, apartment investing requires purposeful planning, execution and management in order to maximize profit. You should want your investment dollars to work towards their highest and best return. Following an investment model that produces recurring income is fine, but one that does that and has a potentially profitable upside upon sale or refinance, in my opinion, is a much better play. The asset itself should be one that allows for low risk, high reward and control. Ideally, we find investing in apartments with day-one cash flow with the opportunity to increase rents through forced appreciation and optimized operations to minimize expenses is a model that will maximize every invested dollar’s earning potential.
Retail Mindset
This last part is similar to part one, “you want a deal” in the sense that it falls into mindset, specifically, what I call, “retail mindset”. An apartment investor with a retail mindset is someone who focuses on the cost of the investment rather than the benefits of it; if they can afford the deal rather than the benefits it can bring to them. This investor, whether active or passive, believes that investing money will result in them having less rather giving them the potential to earn more. This self-sabotaging mindset develops into a mental block or a confused mind that says no. No matter how many opportunities that are presented to them or how advantageous an apartment investment deal is, they will negate every one of them, count themselves out and ultimately never invest even though they believe themselves to be an investor. Why? They have a retail mindset that has been ingrained in them since birth. My question to you is…Do you have a retail mindset?
Are you interested in learning more about creating turnkey passive income and generational wealth through multifamily apartment investing? Visit syndicationcapital.net for free information, guides and resources that will help you get started.
