Why Multifamily?
Passive Income
Investing in growth markets is a great way to earn passive income & reliable monthly cash flows. A good property manager will handle tenant communications, maintenance & leasing, which will free up your time to focus on your career or other leisure activities.
Financing is Easier
Apartments or Multi-Family properties with more than five units qualify for commercial loans. While single family homes have only one tenant, multifamily properties have multiple tenants paying rent. Rental income comes from a diversified pool of tenants, which makes multifamily investment lending from a bank’s perspective a lower-risk proposition.
Inflation Hedge
Multi-family Real Estate is considered a hedge against inflation. Multifamily leases are generally no longer than 12 months long. As leases expire, landlords can increase rents to existing or new tenants by at least as much as the annual rate of inflation. Rising rents help to offset rising operating expenses and can potentially lead to stable or increased cash flow and appreciation.
Increase cost of construction makes housing units more expensive to build. Rising Interest rates makes mortgages more expensive. In combination of both factors leads to reduce demand for homeownership & keeps more people in the rental market.
Tax Benefits
Investor can also take advantage of accelerated real estate depreciation and cost-segregation tax benefits as apartment building and its appliances age, even if the fair market value of the property is technically rising.
Appreciation
Reinvesting in a property through capital improvements and property enhancements can have a nearly immediate payback because then they can command higher rents. Increase in rents can significantly improve Operating Income resulting in increased value of the property.
Cash-Out Refinance
Investors don’t have to wait until a building sells to realize gains. By refinancing their loans, they can borrow against the property’s higher value without incurring the taxes on capital gains that come with a sale.
Stable / Tangible Asset
While your stock gains may be wiped out with a bankruptcy or market crash, multi-family will still be there. People will still need a place to live and people will pay the rent. We don’t need a mall for living, and we don’t need an office space to work.” For that reason, multifamily has a durable income stream.
Diversification
Real estate investments not only help protect your portfolio from stock market volatility but produces passive income. Investing in real estate, and especially multifamily homes, is a sound investment decision that improves your bottom line.