June 4, 2014
Many apartment property investors in their acquisition of apartment loans, end up spreading themselves too thin financially. They put too high a proportion of their finances into one or more apartment buildings. This is especially true of those new to getting commercial loans.
Their mindset is to purchase as big of an apartment complex as possible in order to make as much money as possible. They see that apartment complex investing is a highly leveraged investment strategy and they want to throw as much money as possible into the biggest loan possible.
This is a Las Vegas type attitude, and it can have very negative consequences. There is always risk associated with investments, and in investing you do not want to throw all your eggs in one basket. It is the opinion of the writer of this blog to not put all of your money in one type of investment. In addition, it is always prudent to have plenty of money in savings, cash, and very low risk investments.
Fortunately, banks and other types of loan sources make sure that investors have enough cash in the bank to cover unforeseen expenses in the ownership of multifamily properties.
However, these loan sources will not be looking at your total investment picture. You could still be too heavily invested in apartment buildings, and therefore quite vulnerable to certain risks. These include possible downturns in the economy, military deployment and a downturn in the neighborhood of the property.
Make sure that you exercise financial wisdom in the amount you borrow in getting apartment loans. You will most likely in the long run come out ahead of the person who spends out of proportion to his income. Remember the famous fable in which the tortoise beats the hare.
You can call me at 214-695-7310, or email me at email@example.com with any questions you have regarding your multi family loan needs.
Bruce Painter, Director of Marketing, Business Loan Store