Many beginner real estate investors often find it hard to figure out how they can make money on rental property because the cost of buying land, putting up a building or purchasing property is very high these days.

Most of them will wonder how they can extract enough rent to make the numbers work and repay the bank loan as early as possible.

It is not good to own a real estate that doesn't generate income. However, understanding some of the key principles of real estate investment is the foundation of building a positive cash flow on your property.

Apartment buildings and commercial properties offer greater opportunities, but they also tend to come with higher risks, more problems and require great knowledge.

As I mentioned in the past series; please stick with single-family properties until you have the experience to handle the larger projects.

Establish a track record with lenders (banks) and build a substantial cash flow before moving into large properties.

Investors must take into account additional expenses when going into apartment buildings business over single-family residences. In most cases, tenants in single-family houses pay for utilities like water and electricity but apartment owners are less likely to pay the bills unless each apartment is metered separately and tenants pay for their own utilities. If not, that expense must be factored into your business plan or purchase (as an investor in apartment buildings), because your utility costs can become excessive that you wouldn't even be able to identify the culprit.

Moreover, tenants who pay for their own bills tend to be more stable.

Landlords of apartment buildings are likely to handle maintenance of common areas like recreation facilities, area lighting and management costs.

Expenses on apartment buildings are far greater than those on single-family properties.

Unless you consider these additional expenses, it is very easy to pay too much and find out after that you can't afford to own the property anymore.

Some landlords will offer a rent-free apartment to a resident manager or caretaker who will help to pick up rubbish, collect rent, investigate complaints, discipline disruptive tenants and show units to prospective tenants.

As landlord, you must compute the rent that the unit of your resident manager would have generated as a cost of management and weigh it against hiring services of a high street property management agency.

Investing in apartment buildings is great so long as you build or buy them right and they are located in a good neighbourhood.

However, if you don't take their additional expenses seriously, they can eat up all cash flow from your other projects including your salary.

Another thing apartment investors must be aware of, is: multi-unit buildings are hard to sell; it's not easy to find a buyer of a 20-unit building, so you may be putting too many eggs in one basket.