Real estate investing in urban areas like Chicago can be very rewarding.  That was the focus of a recent article by Edward Luce in the Financial Times,Mutil Unit Investing "Obama Needs to Embrace the Promise of US Cities."

 Creating a portfolio small apartment buildings in American cities through passive investing is an deal way to "Embrace the Promise of US Cities."

When a British newspaper like the Financial Times details the appeal of American cities, as Edward Luce has in a number of articles, investors in the United States should fully investigate the opportunities.  Small apartment buildings offer a unique way to profit from high yield real estate investing.  The owner can live for free in one unit, and let the others pay for the costs.

That is particularly appealing in a building with four units or less.  These types small apartment buildings qualify for mortgages as primary residences.  As such, only 5% down or less is required and the mortgage rate will be low, too.  Through that, much less cash is needed than if the small apartment building was to be purchased as an investment property.

If the small apartment building is part of a retirement account, the rental income is tax free.  There are no taxes on assets held in retirement accounts, such as an individual retirement account (IRA).  Should the small apartment building be sold for a profit, there are no taxes on the capital gains, so long as it is part of a retirement account.

Passive investing further increases the potential rewards of buying small apartment buildings.  Investing in real estate can be risky for the novice.  It is far wiser for to passively invest for the long term with experienced professionals in all forms of real estate, not just small apartment buildings.

During this for the long term increases even more the appeal of small apartment buildings for the passive investor.  Rents in America historically rise about 5% a year.  That means that the rental income from a small apartment building will double in less than 15 years.  If there is a 15-year mortgage on the property, the rent will have doubled along with the mortgage note being gone in little more than a decade.

Investors should be looking to "embrace" small apartment buildings in cities like Chicago due to the profit potential.  Moving forward as a passive investor with a long term approach should result in even higher returns.  Obvious to those in Europe, this should inspire American investors to "embrace" small apartment buildings in urban areas in the United States!