10 Reasons You Should 
(and Shouldn't) Invest in Apartments

Investing in apartments has significant benefits but can also have risks, as with any other investment strategy. Let’s discuss the pros and cons of apartment investing.

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Advantages of Investing in Apartments: 

• Get Steady Passive Income 

Apartment Syndication is one of the most lucrative investments opportunities because it generates steady cashflow. You’ll then receive monthly income in the form of rent checks. Investing in apartments generates passive income without having to work for every day. Instead of working for money, you can let money work for you.

• Save on Taxes

Over time, the physical condition of a commercial property deteriorates due to exposure to weather and normal wear and tear. To account for this, IRS rules allow property owners to “depreciate” or expense a certain portion of a property’s value in each year of its useful life. This is a non-cash expense, but it serves to reduce the amount of taxable income produced by the property, therefore providing a reduction in the amount of taxes that must be paid.

• Leverage Expertise

Passive real estate investing means zero management and zero stress. The syndicator handles due diligence, property maintenance, inspections, and appraisals. As a passive real estate investor, you only face obligations to put money in and receive a return on your investment.

Real estate investments are considered protection against inflation. When the prices of goods and services are rising, home values and rents typically increase, too. Investment properties, then, can provide you with rising monthly income and appreciation to help protect you financially when the costs of everything else is going up too.

• Hedge Against Inflation

Real estate investments are considered protection against inflation. When the prices of goods and services are rising, home values and rents typically increase, too. Investment properties, then, can provide you with rising monthly income and appreciation to help protect you financially when the costs of everything else is going up too.

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• Gain Asset Appreciation

Income-producing real estate is one of the few investment classes that as a hard asset has meaningful value. Real estate assets have historically provided excellent appreciation in value that meet and exceed other investment types. Properties historically increase in value as the net operating income of the property improves through rent increases and more effective management of the asset.

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Disadvantages of Investing in Apartments: 

• Building Wealth Takes Time

Apartment Investing is not a "get rich quick" scheme. Getting rich with real estate requires a lot of education, effort, and time, and doesn’t happen overnight.

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• Education is Required

Understanding apartment investing is more challenging that learning how to invest in stocks. You need to be able to understand numbers of the deal. Passive investors should spend time finding an operator you can trust and then invest with that operator over and over again. 

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• Illiquid Asset

When you invest in apartments, you cannot withdraw your money on demand. Apartment investment is considered an illiquid asset, which means it cannot be quickly turned into cash. For example, if the apartment is going to be held for 5 years, you should expect to have your money in the investment for the entire 5 years.

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• Share the Profits

Because apartment syndication happens when a group of investors come together to purchase and operate the apartment complex, profits are divided.

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• Lack of Control

As a passive investor, you don’t control the investment itself – your operator does. They make all of the day-to-day decisions but they also decide when to refinance or sell. If you’re a control freak, this may be an issue for you. On the other hand, that’s also the benefit of being a passive investor: you don’t have to do anything, just leave it up to your trusted operator!