Why Apartments Are My Favorite Investment Vehicle

[Grant Cardone]

Admittedly, I am a coward when it comes to investing and that is why I love apartments. Everything I have today I worked hard to get and I am extremely protective of it. Like you, I feel like I've worked really hard for my money and the last thing I want to do is blow it. 

I was taught to have respect for money. My dad taught me the value of money and stressed the need to be disciplined and responsible with it. I still remember the quarter my Dad trusted me with at the age of eight. I lost it when I was playing with and will never forget my father saying, "Don't play with money! Don't waste money! Don't lose money!"

I know how hard a person must work to have money. I didn't come from money, I started from zero and I have a massive appreciation for anyone who can accumulate wealth. There is another level to money that most never learn, and that is the art of multiplying money.

This is the genius of money and why I love apartments so much. Apartments provide a safe place to keep money, receive income and multiply money. All the requirements necessary to create wealth are present in this investment vehicle. 

Warren Buffet said, "The first rule of investing is "Don't lose money." Rule number two is "Don't forget rule number one."

He's also said, "Never invest in anything with the idea it's ok to lose money." These simple concepts have shaped my commitment to apartments as the best investment for me.

So, let's see if apartments pass Warren Buffet's test ("Don't lose money.") When you buy an apartment building that produces positive cash flow in excess of the cost to manage, will that property be there tomorrow and in the future?

We all know the value of money goes down over time (depreciates) and most people would agree that real assets, property, in good locations will go up in value over time. This passes Warren Buffett's first two rules.

Now, if we look at Warren's next criteria, he buys companies that produce cash flow. He buys Coca-Cola, See's Canies, Burlington Railroads, Wells Fargo, and now Apple. Why? These companies produce positive cash flow. 

Contrary to popular belief, Warren Buffet is not an investor in stocks, he invests in companies that are indestructible, produce dependable cash flow, and which will increase (appreciate) in value over time due to their ability to produce cash flow. Warren Buffet uses a depreciating asset (cash) to buy appreciating companies that produce more cash. 

Now, understand that most of us cannot take major positions in Coca-Cola or Wells Fargo, but we can buy apartments. 

Here are the four main reasons I love apartments. 

1) They are real assets, not paper, and they can't be easily replaced. 

2) They produce positive cash flow. 

3) Apartments appreciate when rents rise - the multiplier. 

4) Leverage of debt to increase your position. 

Happy holidays, and always feel free to connect via Bigger Pockets.

Grant Cardone