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Apartment buildings that are 5 and more units are now considered in the commercial lending market because most 5 or more unit buildings are not generally owner-occupied and are considered investment or income properties.

An income or investment property is primarily purchased to earn income by renting or leasing space with the secondary goal of long-term appreciation of the value of the property.

Everything income, investment, and even loans are risk-related return-based factors. Location, condition, type, the housing market, laws that affect landlords, etc are all considerations in the buying the sale of the property.


One thing that some first-time investors overlook is the financial cushion needed for repairs, market shifts, vacancy, and repairs just like a single-family home. Some income properties are financed with a variable rate loan and that payment may change and or may be all due and payable for a period of time. You will also have to figure in taxes, any utilities, and insurance for the property as well.

Although real estate investment can be an excellent long-term investment and an alternative to investments like stocks and bonds in my opinion a more diverse and secure investment, a tangible product that you can go, touch, see and have more
control over your own individual management of your portfolio.

Investing in real estate can be one of the most lucrative and reliable ways to increase your wealth, especially long-term residential units tend to be an excellent financial strategy and worth exploring, there are several types of apartment buildings that I will go over below.


Whether a single family with a guest house or ADU, duplex, triplex or fourplex having multiple units allows you to usually have less maintenance, due to one roof, four walls, one electrical system, plumbing, etc. The other great aspect is if you have a vacancy on a four-unit it is only 25% of your monthly income on that building, much easier than 100% on a single family.

While the “Plexes” are considered multifamily, up to four units are for loan purposes still considered under the single-family umbrella. These style properties also provide the tenants a more residential feeling of home vs. living in a densely populated building and usually have their own entrances, parking, and sometimes own yard space. National statistic: Approximately 20% of the American population lives in a 2 to 4-unit property, so this makes for a very attractive investment, especially for an entry-level investment.


A low-rise apartment building is generally defined as having 4 floors or less, there are some that say 3 floors, either way, here on the central coast there are very few 4-floor apartment buildings in the county.

You will typically see these in medium-density areas with multiple buildings, relatively spread out over a large amount of land or may be connected depending on the design. Some common names are townhomes, rowhouses, duplexes, triplexes, quadplexes, garden-style complexes, and 55+ communities.

Many of these low-rise buildings do not have elevators unless they are newer or designed to accommodate people with difficulty with stairs. Units without laundry inside will usually have a shared facility, some complexes will have pools, recreation rooms, community centers or services, etc.

Low-rise apartment buildings are very accessible to investors because they are more affordable, and have fewer tenant expectations of providing amenities, however, they may yield a slightly lower return depending on the market and area.


Mid-rise apartment buildings are those with 5 to 10 floors which are generally in more metropolitan typesetting and 30 to 100 units. These buildings will typically have at least one elevator and are one of the most sought-after forms of residential investment property types for long-term investment.

You will typically find these types of buildings in urban and suburban areas near city centers, colleges, hotels, affordable housing, and condominiums. These types of structures are usually located in a higher-density area where there is excellent access to shopping, transportation, entertainment, and dining.

Tenants tend to gravitate to these types of buildings because of a good combination of affordability, access, and lifestyle. Other reasons are generally low maintenance for the tenant with amenities such as pool, gym, spa, etc.

For investors and builders, the Mid-Rise apartment is one of the most lucrative returns on investment and requires less per unit financially.


The High-Rise apartment buildings which are usually over 10 floors tall are basically exclusively found in high-density, metropolitan areas which we do not have here on the central coast in San Luis Obispo County.

These are usually Luxury buildings where the land is very expensive and a very dense population in downtown areas in mid-size to larger cities. They can be luxury apartments, condominiums, extended-stay rentals, or hotels like the Wilshire District in Los Angeles with views of Beverly Hills and the ocean.

Compared to the amount of land needed, high-rise buildings offer an enormous return on investment however, construction and maintenance are very expensive. These are suited for very high net-worth and intuitional investors.


Mixed-Use refers to the multiple types of tenants or purposes and not the size of the building, commonly with commercial use below and residential above. Any form of commercial, residential, or industrial use would satisfy this classification either horizontally or vertically with uses like retail stores, residences, service businesses, office space, parking lots, hospitality (hotel), gym, manufacturing, etc.

Mixed-use buildings are commonly found in suburban areas that offer access to business, entertainment, transportation, dining, etc. and attract more diverse tenants and offer more in the same area. There are areas such as Grover Beach that have adopted this as a master plan on Grand Ave where there is commercial on the ground floor and 2 to 3 stories of residential above them.


Student housing projects are designed with the sole purpose of housing college and university students that are generally located near the educational center. These properties can be owned by a variety of entities, from mom and pop, private investors, educational centers, or even city, county, state, or federal government.

Student housing is designed with the social aspect in mind so the common areas are geared for socialization, study, and gathering. This style of design affords the property to have smaller interior spaces and creates a higher return on investment. Whereas an income property such as an apartment building is designed with much more privacy, less common areas, and larger interiors.

Senior / Assisted living housing developments and Student housing is specialized types of multifamily housing and are very different than other types in this asset class and require an agent that understands, and has the specialized knowledge and experience to help you through this process.


Senior or assisted living housing is designed to provide housing for the elderly, aging, and people that require medical or physical assistance in their daily life. These properties are typically being developed in a preexisting senior population so that residents do not have to move too far.

These projects and buildings will typically offer a variety of levels of support, very different from a typical multifamily apartment complex. Services may include on-call or in-house medical professionals, housekeeping, meal service, physical therapy, etc.

Because of the high level of service these facilities are very expensive for the occupants and can be extremely profitable to own and manage especially if you are in the health industry.

There are several older facilities in San Luis Obispo County with several newer facilities in the works.


Regardless of which type of apartment building you may be interested in, investing in income or apartment buildings can be a very lucrative path to design for your future. We may start out with a duplex, maybe buy a few over a couple of years and sell them off as a total of 8 units and buy a 20 unit. Working your way up this way can not only be a lot of fun but very rewarding financially as well as we build your portfolio.

We do this trade-up of properties by utilizing an IRS code called a 1031 tax-deferred exchange. This does not exempt you from the tax liability but it allows you to roll that into the next property and will need to be paid when you sell the property and not do a replacement through this tool.

Management is the other aspect of ownership, retention, and profitability. Managing real estate is not for everyone and depending on our location can be quite costly. Management companies vary their rates and services so this is something we can discuss and help you with. Many investors actually start their own management company once they own enough units

We have….

Garden apartments vary from a low-rise apartment complex in size or quantity of units, typically 50 to 200 or more units in one complex. They are 3 to 4-story walk-ups with studio to 3-bedroom units depending on the location and demand with surface

This is generally a collection of buildings that all share amenities which may or may not include pools, clubhouse, playground, dog park, laundry, fitness center, etc. Throughout the year investors have taken these and done condo conversions so there are a lot fewer of these in the marketplace, especially in California.

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