Unlike single-family properties, the demands for apartments have increased at a record level. This is because apartment marketing as an investment vehicle offers great returns with less or no risk than other real estate investment areas.
Multifamily is a priority of the investors because it is less reliant on market values and will continue to give benefits while demographics trends and population growth.
Housing is a base need. Economies come and go. Disruptors force change. Housing will ALWAYS be needed. Affordably priced, working class housing has a growing demand. This asset class outperforms decade in, decade out. Your portfolio value doesn’t change in one day based on a rumor in the stock market or speculation trying to predict what today’s news means.
To lighten your tax burden, multifamily has the advantage of tax deductions in tax depreciation, which eventually leads to healthy legal cashback.
Multifamily provides a constant cash flow which leads towards financial freedom. It provides returns in 5 different ways: appreciation, leverage, Equity, Depreciation, and income. While looking for more cash return, one should tilt towards multifamily investment.
At first, it might look that single-family apartments are easier to manage, but that is not true. Loans for multifamily apartments are more likely to be approved by the banks. This is because the bank is guaranteed that the multifamily apartments will not be fully vacated, and they might generate a steady monthly cash flow. On the other hand, if tenants leave the single-family property, it becomes completely vacant and stops the overall cash flow. This equates to a less risky investment for a lending institution and also results in a more competitive interest rate for the property owner
Over time, as your portfolio grows, you can sell the smaller units and roll the proceeds into larger multifamily investment opportunities through what’s known as a “1031 exchange”. Those with a buy-and-hold strategy might instead hang on to their smaller multifamily homes while the tenants pay down the mortgage and value appreciation. Eventually, these investors will be able to leverage the equity in their multifamily portfolio to invest in larger multifamily properties.
For those willing to make a healthy real estate portfolio, a multifamily apartment business might be the best investment area for them. Multifamily is less time-consuming because buying 20-single apartments is a difficult task as compared to buying a single property with 20 apartments.
Investing in multi-family real estate is a great way to generate additional income without lifting a finger. It is easy to hire a property manager who will take on the day-to-day responsibilities for you. This is particularly attractive to those who have little experience owning or managing rental property.
