Investing at Scale to Massively Grow your Net Worth
Most people fail to realize how vital investing at scale is to massively grow their net worth.
When you purchase a single-family home, you are limited to renting the house as a singular unit. As the sole owner, you have to take on the liability of the entire loan, leaving you at significant risk.
It takes a long time to grow one’s net worth by purchasing single-family residences one at a time. Additionally, a bank will only loan you a certain amount of money based on your ability to pay a mortgage without a renter in place.
The general rule for owning residential rental properties is:
You either purchase them all cash OR
Only buy as many as you can afford to service the mortgage without a renter.
When you purchase an apartment complex (or at least a percentage of one), you benefit from hundreds of units. It can be improved upon, refinanced, and sold for remarkable profits. The other substantial benefit is that a passive investor enjoys the total value of the real estate without being a guarantor on any loans! The sponsors offering the multifamily investment must personally guarantee all financing which means they have skin in the game to protect your investment.
The other benefit is that the managing cost of a 100-unit apartment building is a fraction of the cost if you had 100 single-family rental homes, so your ROI increases significantly.
Every sophisticated investor should take full advantage of the myriad of benefits that come with leveraging economies of scale.
Investing at scale may be the missing link to massively growing your net worth.