"Play the Rebound" in Housing with Small Apartment Buildings: - Small apartment buildings are often overlooked in real estate investing.  In "Housing Play the Rebound"  in Money magazine by Lisa Gibbs,Housing with Small Apartment Buildings this profitable and proven way of investing did not receive its due.

There were many ways to benefit from the revitalized American housing market, as covered by Gibbs in her Money magazine piece.  But small apartment buildings offer advantages to all others when done as a passive investor with a long term approach.  Through that, a substantial portfolio can be be built up for the investor in a form that requires little cash yet results in low mortgage rates.

For the investor willing to accommodate certain lifestyle demands based on where to live, many small apartment buildings can be acquired with very favorable terms.  If a small apartment building has four units or less, it can be purchased with primary residence terms.  That means only 5% down is required with the lowest mortgage rates,  By contrast, if a small apartment building is bought as an investment, 25% down is needed.  Even with that much of a down payment, the mortgage terms will still not be as low as those for a primary residence, even though it is the same owner.

Buying a small apartment building can easily allow for the owner to live for free, with the cash flow to buy more properties.  That can be addressed in the initial purchase.  As rent rises by an average of 5% a year in the United States, that provides more income to buy additional small apartment buildings in the future.

Investing for the long term results in a tremendous cash flow future.  At 5% a year, that means that rents double in less than 15 years.  If there is a 15-year mortgage on the small apartment building, that means that the rental income doubles just as the mortgage note is retired.  

The cash flow gains from that are enormous.

As an example, if a four-unit building is bought that rents for $1000 each, that means that $48,000.00 in rental income results every year.  At 5%, that means more than $100,000 is generated by year 15.  With no mortgage, this cash flow real estate provides a robust stream of income to buy more small apartment buildings.  With that investment income, the process can be repeated, time and time again.

Passively investing in small apartment buildings can result in property that already has suitable tenants.  Real estate such as this is known as a "turnkey property."  The combination of passive investing with a long term approach with small apartment buildings can easily produce a portfolio of high income properties, especially with turnkey properties as the foundation of the holdings.  

Based on history, the investment income will grow as rents increase.  That provides a unique, and lucrative, combination of higher income along with a more valuable property.  That combination makes small apartment buildings an ideal way to profit from the "rebound" in real estate!