Real estate is a flexible investment type. Investors can use different strategies and invest in different kinds of real estate to grow their wealth. But to succeed, investors need to know what they are doing. This involves understanding the potential risks and rewards of each real estate investment.

For example, buying an apartment complex is a popular choice because it is known to be profitable. However, there are pros and cons that you should know about before making this type of investment.

Compared to single-family properties, when investing in apartment complexes, investors will have to play the role of landlord and handle everything unless they spend money on a third-party property management company. There is also the option of multifamily syndication, which we will discuss later.

But for now, we assume the investor is interested in purchasing and running an apartment building. In this case, there is plenty of work to be done. Here, we will cover what investors need to know about multifamily real estate investing, particularly apartment complex investing.

WHAT TO KNOW WHEN BUYING & RUNNING AN APARTMENT COMPLEX

The first thing to consider when investing in an apartment complex is whether or not this type of real estate investment is right for you. Some real estate investors are better off renting a single-family property. Others, particularly accredited investors, may gravitate towards multifamily syndication. Some real estate investors don’t choose to rent their property at all, preferring to flip houses.

Weighing the pros and cons is a good way to see if investing in an apartment complex fits you. Generally speaking, multifamily investing takes more research, time, and effort on the part of the investors. But the benefits of this real estate investment approach are undeniable.

Multifamily real estate investing gives you access to consistent recurring income, making it a safe investment. Because multifamily properties have more than one unit, they provide a continuous cash flow. Even if one or two units become vacant, investors still get rent from the remaining units. These units won’t remain vacant for long if the property is in a good location or has impressive amenities. On the other hand, if a single-family property becomes vacant, the cash flow stops until new residents move in. [1]

Investing in an apartment building may yield higher returns than other investment vehicles. Remember that this still depends on market conditions and other factors. [2]

Recurring income is one of the biggest reasons investors go for multifamily properties. A multifamily property can be any real estate with more than one unit, including duplexes, triplexes, four-plexes, apartment complexes, and condominiums. These multifamily properties can bring consistent income as residents pay rent monthly. Apartment complexes are even more reliable because of the number of units.

Because of this setup, apartment buildings tend to mitigate the effects of a high vacancy rate. Unlike single-family properties that lose 100% of their income when the family moves out, apartment complexes can diversify income, generating income even when there are few vacancies. Multifamily investing is a good way to generate positive cash flow. [1]

There is also the option of generating supplementary income by adding vending machines, laundry machines, parking spaces, etc. [2]

Apartment complexes make good investments because they can offer substantially lower risk for the investor. But no investment is perfect. There are a few drawbacks you should know about before putting money into multifamily real estate investing.

For starters, buying an apartment building is much more complex than acquiring a real estate property with just one unit or a small multifamily property. These buildings are more expensive and are, therefore, harder to acquire in the first place. It can be difficult for the average investor to buy an apartment complex independently.

This industry is also very competitive because experienced investors know how lucrative it can be. The best apartment complexes likely have multiple investors wanting to purchase them. In terms of management, apartment complexes are more intensive. You have to take on the responsibilities of being a landlord: managing residents, handling emergencies, and taking care of the facility. It also involves frequent maintenance, which can be expensive in the long run. [1]

For first-time owners, apartments can be challenging to manage. That is why many investors choose to outsource this part of the job to a property management company. This option is good since apartment complexes bring in enough income to justify the added expense. However, managing an apartment building can be expensive, as can increased maintenance costs. [2] Finally, apartment complexes are not particularly liquid, unlike public securities. An entire apartment can be difficult to sell, even in a seller’s market. Finding a suitable buyer and successfully closing the deal may take a few months. [2]

Whether or not multifamily real estate investing is a good choice depends on your personal goals. Because of its several benefits, it could be the ideal fit for many experienced investors and even high-net-worth individuals (HNWIs). 

WHAT TO LOOK FOR IN AN APARTMENT COMPLEX

If you have decided that multifamily real estate investing is the right choice for you, then the next step is choosing an apartment building to purchase. This is no simple task, and you should do your due diligence before deciding. You must look at your personal and financial criteria to assess prospective investments. Here are a few things to consider when choosing an apartment building.

Investors need to consider their budget and risk threshold, as this will affect their choices. Think about how many units you want your investment property to have and what kind of return on investment (ROI) you want.

The number of units is significant because this will determine your cash flow. It will also affect the price because larger apartments with more units tend to be more expensive. If you only need a way to supplement your income, sticking with a modest building no larger than six units may be a good idea. If you have a higher risk tolerance and want a higher income, you should consider a larger building with 12 or more units. [1]

Next, you should think about what kind of apartment you want to invest in. Some houses have been converted into multiple units, two-story garden apartments, and buildings with more than a dozen units. Apartments come in a variety of forms.

You can also narrow down your choices based on asset class. Class A, B, C, and D apartments are categorized by the caliber of the property. Newly-built apartment complexes that are well-located and have great amenities are considered Class A. Class B properties are well-maintained but may be older or need maintenance. Class C properties are much older buildings with limited or no amenities. Class D apartments are low-income properties that require renovations and repairs. [1]

While there is no official way to categorize a building into these specific asset classes, these terms are often used in real estate to quickly communicate a particular property’s quality. Some investors focus on Class A properties because those are the most profitable. These are apartment complexes that people want to live in.

Other real estate investors go for Class B properties and renovate them to bring them to Class A. Then, there are the investors who go for Class C properties because they cost much less than Class A properties. There are many different strategies you can employ.

Finally, you should take note of the apartment’s amenities. This is one of the factors that can attract residents. A well-located property in the right market, with good amenities, basically sells itself. You don’t need to spend on marketing the apartment because many people want to live there.

CHOOSING A LOCATION IS KEY

Evaluating the neighborhood is just as critical as assessing the property itself. It may be a cliché, but real estate is all about “location, location, location.” This is a popular saying for a reason. Whether you are going for a single-family unit or a multifamily property, location is very important. You need to choose a location that you can be confident about. [2]

An apartment close to schools, shopping centers, museums, restaurants, transportation, and major employers is bound to attract residents. This often positively influences your cash flow if you invest in an apartment complex in such a location. These places are in high demand and would have very few vacancies—if any.

Just like any other real estate investment, your goal would be to purchase a property in a desirable area. This is arguably more important when it comes to apartment complexes because you want your property to naturally attract residents. Some investors go for cheaper apartments in less desirable neighborhoods and struggle to attract residents. Others can make it work for them, but this approach is riskier. If you do not have the skills to manage properties in these locations, you may be better off putting your money elsewhere. [1]

Before purchasing an apartment building, investors need to consider factors like employment and economic data, population growth trends, crime and safety, and the economic health of local employers. Neighborhoods with low crime and great job opportunities attract higher-quality residents. The apartment’s location should motivate residents to stay for a long time. [2]

FINDING AN APARTMENT COMPLEX TO BUY

There are many ways to find an apartment building for your real estate investment. You can approach Real Estate Investment Associations or REIAs, work with real estate agents and business brokers, or just find one yourself.

You can try looking for apartments that are “For Sale by Owner” (FSBO). You may be able to negotiate 6% to 7% off the asking price of FSBO properties because sellers are not paying a real estate commission. In fact, this is such a common trend that some FSBOs list higher prices, expecting buyers to deduct commissions from their offer. [1]

If you do want to search for an apartment complex yourself, you could consider joining a local REIA. You can network with other investors in these groups to find apartment buildings for sale.

There is also the option of working with a real estate agent. This should give you access to the biggest body of properties for sale, including apartment complexes. Real estate agents have access to one or more Multiple Listing Services (MLS) that list all of the properties for sale by every agency within that MLS. Depending on the registered user’s certifications (commercial vs. residential real estate agent/broker), this database can display commercial multifamily real estate properties you may want to invest in. [1] Not all MLS systems list commercial real estate. Popular commercial MLS providers include LoopNet, CoStar, CIMLS, and others. 

Not only can real estate agents help you find investment properties, but they can also negotiate with sellers so you can get the best prices.

THINK ABOUT FINANCIALS

After locating the ideal apartment complex for your real estate investment, evaluate its financials. Evaluating basic numbers should give you an idea of a prospective investment’s financial performance. You should consider things like gross operating income, vacancy rates, and expenses to determine whether or not a property would make a good investment.

For example, gross operating income is the total rent and fees collected from the property. With this, you should get an idea of how profitable an apartment could be. However, there are other factors to consider, such as expenses.

Expenses would include things like insurance, repairs, maintenance, utilities, municipal costs, taxes, fees, management expenses, and advertising. Before you even purchase an apartment complex, you need to know the total expenses for a year. Also, take a look at how much you would spend on the property to keep it running for a month. [1]

Use all of this information to determine your net operating income (NOI). Then, subtract your debt and interest. This is how much you will earn from your apartment once all the expenses have been accounted for. Figure out what the property’s annual and monthly net income is going to look like—net income is your cash flow. As an investor, you need a real estate property that generates a positive cash flow.

YOU NEED A TEAM TO RUN THE COMPLEX

There are many things to consider before purchasing a multifamily real estate property. In fact, this is just the tip of the iceberg, as multifamily investing could get very complicated, especially when you are going after something with many units. It takes a lot of hard work, and you need to do your due diligence to make sure the investment works out for you.

For something like an apartment complex, acquiring it is only half the battle. Running an apartment complex is an entirely different beast. It’s a very detailed full-time job. This type of investment is more involved than other real estate investments. Done properly, you can enjoy a consistent income stream from a relatively safe investment, but it takes plenty of work.

Investors should consider hiring an apartment building management company. This is a third-party organization that will manage the property on your behalf. This takes some of the pressure off your shoulders so you can focus on other investments and business endeavors. Since apartment complexes bring in a substantial amount of income, it is one of the real estate investments that can easily justify hiring a property management company.

When choosing a property management company, you must find one that fits your needs. Intelligent hiring is essential. Look into the company you want to work with and see if they train their employees adequately. Their services will reflect upon you as the property owner because they will be managing your residents. [3]

Apartment complex management companies will be working with your residents directly. They will help them with maintenance issues, making payments, etc. This means an experienced staff could make or break the experience for your residents. Prioritize client service so that your residents are satisfied.

An apartment manager’s job is to handle all the day-to-day activities involving the apartment. They will take care of resident complaints and requests. They will also collect rent, deposit money, and contact residents who haven’t paid their rent on time. They also handle prospective residents, showing them the apartment if they express interest. [3]

Property managers also make repairs and general maintenance to keep the property in good condition. This is a very demanding job. It requires a very specific skillset—which is why it is not generally suitable for first-time real estate investors. You may get overwhelmed by all the responsibilities of a landlord. It takes a team to run an apartment complex.

Whether you are investing in a small apartment with only a handful of units or a larger building with many residents, you should think about working with a professional team for property management. Hiring a property management company should help you save time and energy. It also reduces your stress since you don’t have to get involved in the day-to-day activities of an apartment complex.

WORK WITH BAM CAPITAL FOR MULTIFAMILY APARTMENT INVESTING

There is no doubt that multifamily real estate can be profitable. But, investing in an apartment complex takes hard work and due diligence to make sure everything goes smoothly. It has a large barrier to entry because of the expensive properties—acquiring an apartment complex is no small feat, especially for the lone investor.

Once you acquire the property, you become a landlord, and the real work begins. Even if you hire a property management company, it does not make it a true passive investment.

Multifamily syndication solves many of the problems that investors have with this investment type. A multifamily syndication deal is when multiple investors pool their resources together to purchase a single property. It can be done with any type of real estate property, but when it is done with a multifamily property, this is called multifamily syndication. [4]

Multifamily syndication is very popular among experienced investors because it is a way to obtain properties that they normally would not be able to purchase on their own. This type of investment gives them access to more expensive real estate properties such as large apartment complexes.

A syndicator, also known as a sponsor, puts the deal together. They look for an investment property, secure the financing, and then look for passive investors who will participate in the syndication. Passive investors will then provide a portion of the capital and earn money from the cash flow and the equity, depending on the deal structure. [4] The best part is that the syndicator also handles property management, which means this is no longer something you need to worry about. They may hire a property management company or handle it themselves, but you, as an investor, wouldn’t have to do anything.

Most syndication deals are only accessible to accredited investors, but some are open to the general public. If you have been turned off by the idea of being a landlord, this is the best real estate investment for you. You don’t even have to spend time locating an apartment complex on your own. You can still choose which syndication deal to participate in, so all you have to do is find a syndication for a property that you are confident in.

CONNECT WITH AN INSTITUTIONAL REAL ESTATE OWNER/OPERATOR

Like other real estate investments, multifamily syndication is still subject to illiquidity because these deals tend to last for years. Accredited investors, however, are somewhat more comfortable with not having access to their funds because of their high net worth and income.

Still, working with a syndicator you trust is important because, as this is a passive investment, they will make all the decisions regarding the investment property.

BAM Capital has been focusing on buying the most profitable assets and staying disciplined in its investment thesis. BAM Capital’s investment strategy aims to create forced appreciation while mitigating investor risk. To date, the brand has successfully managed over $1.7 billion in assets across ~9,000 apartment units. [5]

Remember that no investment is without risk. Before making financial decisions, consult your investment advisor and schedule a call with a BAM Capital investment team member.

Disclaimer: All investments carry risk, including potential loss of capital. This content is for informational purposes only and is not financial, legal, or investment advice, nor an offer or solicitation to buy or sell any security. Consult an independent advisor for personalized guidance and contact BAM Capital for details on current offerings. BAM Capital and its representatives are not fiduciaries or investment advisors. The information provided is general and may not reflect individual financial goals. Any financial terms, projections, or forward-looking statements contained herein are hypothetical in nature and should not be interpreted as guarantees of future performance or safety. Such statements reflect Bam Capital’s opinion and are subject to market fluctuations, economic conditions, and investment risks. Past performance does not predict future results. BAM Capital and its affiliates do not guarantee the accuracy or completeness of this information. Bam Capital offers investment opportunities under Rule 506(c) of Regulation D exclusively for accredited investors as defined by the SEC. Verification of accredited investor status is required prior to participating in any investment. 

© 2025 Bam Capital. All rights reserved.  

SOURCES:

[1]: Fit Small Business. (n.d.). “Buying apartment buildings.” https://fitsmallbusiness.com/buying-apartment-buildings/

[2]: Janover. (2024). “Buying Your First Apartment Complex: An Investor Guide.” https://www.multifamily.loans/apartment-finance-blog/buying-your-first-apartment-building-an-investor-guide

[3]: Northeast Private Client Group. (2021). “5 Major Challenges of Managing Apartments as a Property Investor.” https://northeastpcg.com/blog/managing-apartments/

[4]: The Motley Fool. (2024). “How to Start Investing in Real Estate: The Basics.” https://www.fool.com/investing/stock-market/market-sectors/real-estate-investing/basics/

[5]: BAM Capital. (n.d.). “Current Portfolio.” https://capital.thebamcompanies.com/