Have you ever driven past an apartment and wondered, "Who owns that?"
Perhaps you believe that all of the apartments are owned by giant corporations. I have news, they aren't, but then who owns them and how did they buy them?
This leads me to what I want to talk about today:
Common misconceptions of apartment owners
1 - Apartment owners are nameless, faceless corporations
This can't be further from the truth.
The vast majority of apartments are owned by people like you and me.
Last year I looked at 4 different properties owned by the same married couple, they were in the process of selling these so they could consolidate closer their portfolio closer to their home and traveling across the Twin Cities to each property was getting to be too much for them as they grew older. Not only did they own these properties themselves but they also took pride in how the upkeep of the properties. He was doing most of the maintenance and upgrades to the units.
Another property I took a look at early on was owned by a gentleman and his daughter. He bought it out of foreclosure back in the 2000's and fixed it up to make it safe and comfortable for the families he was able to get to move in. The only reason he was trying to sell these two buildings was because he had built up the equity and was looking to move on to a larger building.
My mentors Jake & Gino were just a pharmaceutical sales rep and a pizza guy and went on to build a portfolio of hundreds of units with their partners.
2 - Apartment owners are born or marry into money
I have met very few people in this camp and out of the hundreds of people I have talked with, can only think of a small handful that this applies to. The rest of the people I have met got to where they are on their own.
The first thing they did is take control of their financial situation. Most lived within or below their means so they had the ability to buy their first property and from that first came the next, and the next and so on. Others relied on skills they had acquired in life and their careers to be able to add value to a team.
I've met quite a few people who are successfully buying apartments while working as teachers, firefighters, nurses, and even in the military. Of course there are others who are lawyers and doctors but that crowd is dwarfed the public servants or other W2 employee.
3 - Apartment owners are rich
I don't think I've heard of teachers, firefighters or military service members be referred to as rich so why do people thing that the owners of apartments are rich? I think the media likes push this narrative because it creates a bad guy, someone that can be blamed. The reality is a lot of apartment owners are just trying to get by like any other small business.
Apartments are businesses and the owners are mostly small business owners, just like that store in the strip mall. Apartment owners are all greedy and don't care about the people living in their buildings
4 - Apartment owners keep the rent for themselves
Many people who rent think their rent payments go straight into the owners pocket. They forget about the expenses it takes to maintain and manage the property. Remember, the apartment is a business and like all businesses there is income but also expenses.
The owner has expenses that the renter doesn't need to worry about or even sees. They would certainly notice if the expenses weren't covered and the water was shut off, or the electricity cut off, or the trash doesn't get picked up. Two of the largest expenses an owner has to cover are property taxes and their mortgage payment, neither is avoidable, and failure to pay can result in the owner losing the property.
5 - Apartment owners are cheapskates
I'm not going to cover for bad owners on this one. There are some owners that don't maintain their properties or fix what is broken. These are actually the owners we like to buy from because we see the value we can bring.
One thing I have seen is when an owner loses control of the income vs expenses. Generally speaking the expense tend to increase every year but many owners don't raise their rents to match their added expense cost. This trend might be immediately sustainable in the long run it is a recipe for disaster. Look at your favorite restaurant. As their cost of food and labor goes up so does the price on their menu. The same holds true for apartment owners.
6 - Apartment owners are heartless
Many people thing that because the apartment owner has the ability to evict people they don't have a heart. I have to go back to what I have said about the apartment being a business. Eviction is an unfortunate, and sad, side effect of owning and operating this business.
The owners I interact and spend time with truly care about the people and families living in their apartments. They do everything they can in order to avoid an eviction but they still have a business to run.
The contract between the owner and renter goes two ways, the owner needs to provide a safe and livable environment in exchange the renter is responsible for paying their rent and complying with the rules of the property.
We view eviction as a last option and most owners do everything they can, including seeking out government assistance for the resident, to avoid what is sometimes necessary
What are some other misconceptions you have heard about apartment owners?