10 Reasons to Consider Investing in Apartments
Indeed, apartments are still a moneymaking investment. In fact, it has always been a good investment. The industry will continue to see heavy appreciation regardless of temporary fluctuations including the increasing interest rates, increasing property taxes and a potential recession.
Nonetheless attaining a reliable source of income through property investment will solely depend on maintenance, management, and success—the fundamentals of investing in a multifamily property. If these standards are met, your pockets will never be empty. However, if one of them is forsaken, your revenues will start to plunge. By selecting the right property of the right developer in the right location and afterward being clever in managing the property, investors can produce countless benefits unmatched by other investments.
If investors focus on property fundamentals while sharpening their investment strategy and conservatively underwriting aimed at today’s market, apartments are yet a high-performing investment in 2019.
Here’s a deep dive into some of the key reasons why property investment is way more lucrative and a brilliant choice for growing and protecting your wealth:
1. Reliable Income Stream
Having multiple units at your discharge is a great way to generate capital in real estate. Renting out your properties provides you with many streams of rental income on a monthly basis. This means you have more cash flow each month which will help you repay the mortgage faster, which then again makes it easier to obtain financing for an apartment building. Banks never hesitate to lend a real estate investor the money to invest in apartments. Why? Because there is a guaranteed income from multiple sources.
One of the major benefits Real Estate Investments is that the assets are mostly secured by nine to fourteen-month leases which provide a steady and reliable income stream that should produce positive cash flow higher than usual stock dividend yields.
2. Convenience
In a world where everyone leads a busy life, we need everything in a blink of an eye and so we want all of our necessities such as public transport, shops, schools, dining, and parks all close at hand to lead a convenient lifestyle. Apartment developments are inclined to be positioned within the proximity of these conveniences making it a popular choice for many particular professionals.
3. Growing Population
Unlike commercial real estate investments, residential real estate investments continue to thrive due to its close ties with residential trends and demographics. It is believed that demographics will hold the key to the future of property markets. The current population, the way we want to live and where we want to live will be a more important factor shaping the future property markets than the short term ups and downs of supply and demand, consumer sentiment or interest rates. Sri Lanka’s population is 21,024,770 as of Friday, August 2, 2019, based on the latest United Nations estimate which is equivalent to 0.27% of the total world population. According to the world population review, the Sri Lankan population is growing at a rate of 0.913% annually. The luxury housing segment specifically has seen a capital appreciation of 10-15% with a rental yield of 4-6% in recent years. Understanding Sri Lanka’s lifestyle and demographic trends will provide you with the type of insight you need for constructing a successful property investment portfolio.
4. Appreciation of asset value
Another key reason to consider apartment ownership is property appreciation. Real estate properties tend to rise in value annually at a steady rate. This makes it a great way to make money in the short-term while renting it out and in the long-term while it appreciates. By the time you sell the investment property, it would have dramatically risen in value especially if you hold on to it for a long time.
5. Inflation Hedge
Real estate investments have in history shown the highest connection with inflation when compared to other asset classes. While countries around the world continue to print money to spur economic progress, it is imperative to identify the benefits of owning an apartment as a hedge against inflation. Usually, when inflation occurs, the price of real estate, particularly multi-tenant assets will also rise.
6. Physical asset
Real estate investment is one of the few investment classes that has a meaningful value as a hard asset. The property’s land has value, as does the structure itself and the income it generates has value to future investors. Income-producing real estate investments do not have red and green days as the stock market does.
7. Tax benefits
Investing in real estate apartments is a great way to improve wealth and enhance cash flow. For wise investors, it is not about how much money you make that matters, but how much money you keep. By taking advantage of the diverse tax benefits of investing in residential real estate, you can keep more of what you make.
You can obtain tax deductions on bank loan interest, cash flow from investment properties, operating expenses and costs, property taxes, insurance, and depreciation even if the property gains value and other benefits
8. Off the plan purchase
A great reason why apartments make better investments is that there is an opportunity to purchase apartments off the plan. This means you can buy the property before construction even initiates, making the property far more affordable. You also do not need to pay a mortgage until settlement arrives, which might be two or more years away, giving you greater time to save up a larger deposit. A longer settlement time might also see your apartment grow in value.
9. Building is managed
Another advantage of owning a unit is that everyone shares the cost of building repairs, maintenance, and building insurance. Keep in mind the more facilities and amenities your building has the higher the fees. But with this also comes the greater potential for higher future value and the opportunity to increase your rent.
10. Pride of Ownership
The right property in the right location with the right residents and the right ownership mindset can produce a tremendous pride of ownership factor that is highest among all asset classes.
Does investing in apartments make sense to you? Apart from the aforementioned reasons, there are a lot of motives that drive investors to invest in apartments over other asset classes. Different investments produce different results. The question is, what results do you want?
If you’re thinking of investing in apartments, speak with Blue Ocean’s Real Estate Investment professionals at +94 77 7546 546 to learn more.