Pros & Cons of commercial real estate asset classes via Parkhurst Real Estate Investments

Why multi-family apartments are our favourite asset class in any market cycle.

Lower purchase price, same rent.
Due to higher economies of scale, the ‘per door’ cost of an apartment unit is less than a single family home or condo, but can generate the same rental income.
For example, you can buy an apartment building for $90K–$100K per door that rents for $800 per month, or you can buy a condo worth $150K–200K that rents for a similar $800–$1,000 per month. This means you can have almost double the rent for the same amount of investment capital, assuming you have enough to buy the apartment building.

Less vacancy risk Apartment vacancies are far easier to manage. If you own a rental property and your only tenant can’t pay their rent, you have a risk exposure of 100%, and you’re now paying all operating expenses (mortgage, taxes, etc). When you own an apartment building and tenant doesn’t pay their rent, the rest of your tenants still cover operating expenses. The chance of every tenant in the building failing to pay rent is almost zero.

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