One important aspect of apartment houses is that the tenants are pooling their money to pay down the mortgage on the property. Furthermore, their money pays for all of the maintenance work on the building. Finally, the idea that the amount of money they paid in rent leaves the investor with cash left over at the end of every month, which can be reinvested (in another building) or saved for future needs.

Cash flow on a multi-family unit always exceeds that of a single-family because the owner has rent coming in from more sources which means there is less of a risk to the owner's income. When the owner of a single family unit loses a tenant, he or she has lost 100% of the income from the unit, which could well be all of the profit for the year, but when a three-family house and loses one of the tenants, the owner still has two rents coming in to cover the expenses. In short, the more units under one roof, the less risk there is.

Deciding not to invest in apartment houses is a big gamble. Years down the road, investors may have been flipping a lot houses and are making some good money, they may even have some single-family rentals that they're holding for long-term cash flow. However, when they want another payday, they have to buy and sell another house. Furthermore, since the cash flow on single-family keepers averages $200 to $300 per month, if the owner loses one tenant for just one month, he or she has probably lost the profits for most of the year.

By collecting apartment houses during those same year-period while buying those single-family houses, would have a net positive cash flow of ball park of $15,000 per month each and every month - and the management company would be doing all the work! Losing one tenant in a three-family building still leaves room for the other two tenants to cover the expenses and also give yield a little cash flow as well. Owners are also creating more and more equity in those apartment buildings as they pay down the mortgages. As the market rises and the properties appreciate, the owners are setting themselves up for some huge paydays further on down the road.

There are many advantages in terms of maintenance expenses when comparing multi-unit homes with single family homes. For example, take the differences between six single-family houses and one six-family building. In the first case, the owner may have as many as six roofs to replace or repair, six yards to be maintained, and six tenants spread out throughout the region. In the latter, there is only one roof and one yard to worry about, while the tenants are centrally located.

Due to the bigger cash flow that goes hand in hand with apartment-house investments, owners can afford to hire management companies to oversee their buildings and tenants. This frees them up to go out and find and finance more buildings which will exponentially increase their profits. One reason apartment-house investing isn't as popular as it should be is that many investors don't want the hassle of dealing with tenants or the expense of a management company. However, when owning single family units, people soon realize that the time spent dealing with tenants is time taken away from finding and financing more buildings. It always proves more cost-effective to systemize the management of the buildings and hire an assistant to implement and oversee the system.

When  relying on professional management companies, consider their costs is something that needs to be factored into every potential new purchase. When buying properties out of state, it is a good idea to hire local management companies to manage them. The rule of thumb is to pay them 8 -10% of the gross collected rents for buildings with 20 units or less and 5 - 8% for buildings with 20 units or more. By doing this, the property should still produce the minimum level of cash flow once the owner takes into account the management costs.

Selling a multi-unit building property also yields a much larger profit than the sale of several single-family homes usually generates. Since an apartment complex costs more than single-family homes, it is likely to produce a greater dollar amount of appreciation. For example, let's say the real estate market appreciates 10%. A $50,000 single-family house will be worth $55,000 while a three- family house you bought for $200,000 will sell for $220,000. That difference means $15,000 more in the seller's pocket when all is said and done.

Learning how to invest in apartment houses is like adding a commodity to a toolbox. Although it may not be needed every day, when the chance comes to use it, it pays for itself over and over again.