I was asked the other day by a new investor what is the best type of commercial property is to invest in. I like apartment buildings best. They are easy to find, easy to analyze, everyone needs a place to live, banks love to lend on them, and they’re great cash flow generators – especially now that prices and interest rates are down! In fact right now FNMA is offering 5.5% loans on apartment buildings!
For a new investor they are easy to analyze, manage, and easy to relate to. For an experienced investor they are straightforward to manage and you can set up business systems to automate and delegate the mundane day-to-day tasks of owning apartment buildings. Once one is started it is relatively simple to buy more and more apartment units and become a rich apartment building mogul.
Now is a great time to start. There are lots of great deals on apartment buildings because the renter pool is substantial due to foreclosures and prices are going up.
My advice to my new investor is to start off with apartment buildings. I recommended that to start by investing in small to medium-sized multi-unit properties (5 to 12 units) then work your way up to larger properties as you gained experience and a strong management team.