Multi-Family Real Estate Investment Benefits
Investing in real estate is a great way to grow wealth if done responsibly and with an understanding of the risks and rewards involved. It is also a better investment for those who wish to take an active role in growing their capital, rather than passively putting their money into a managed account.
One of the beautiful things about real estate investing is its flexibility and scope of strategies employed. You can create your own wealth by flipping houses or investing in apartments, office space, retail, industrial or other properties and slowly acquiring an income producing a portfolio of rental properties. Which one is the better investment?
Investing in apartments is one of the best investment strategies for investors who want an additional source of monthly income with slow but steady appreciation in the value of their portfolio. When it comes to real estate, there are two main types of properties that one can invest in: single family and multifamily. Multifamily properties, or apartment complexes, are buildings with more than one rentable unit. While there are fewer restrictions to build a portfolio of small homes, multifamily real estate investments have several advantages. Here are six reasons why you should be investing in apartments.
#1: Dependable Income Stream
Rental property investments provide a regular and dependable income stream that produces positive cash flow that is higher than typical stock dividend yields. Where investing in a promising stock is volatile and uncertain, a property investment has an overall much greater ROI over time. Always take into account the lifetime of your investment; in this department, property will always be the safer investment.
#2: Reduced Debt by Property Income
The amount of the property’s net operating income (NOI) reduces the debt on the property. The NOI is calculated by the gross income less all expenses before debt. It will sufficiently fund the debt payments, thus reducing the debt balance and creating equity.
#3: Tax Benefits
The US Tax code benefits real estate owners in several ways. This includes no limit mortgage interest deductions and depreciation accelerations that shield a portion of the cash flow generated and paid out to investors. At the time of sale, the IRS also allows investors a 1031 provision, which allows investors to exchange into another investment property and defer all taxable gains into the future. Peak Commercial works very closely with experts in the 1031 Exchange office – this gives clients additional support and control of a transaction, as well as a dedicated team working on their behalf.
#4: Appreciation of Asset Value
Multifamily rental properties provide excellent appreciation in value that meet and exceed other investment types. As such, apartment complexes increase in value as the net operating income of the property improves through rent increase and more effective management of the asset.
Remember, you should maintain your property so it retains its value over the long haul. The grounds must be kept, minor repairs performed in your ongoing maintenance plan, and a quality maintenance staff must be in place. Do your due diligence when selecting those who will work for you. You want to employ maintenance and grounds keepers who share your desire to provide clean, safe housing.
#5: Portfolio in Less Time
Multifamily real estate is suitable for investors who wish to build a large portfolio of rental units. For example, acquiring and managing a 20-unit apartment complex is a lot easier and much more time efficient than purchasing 20 different single-family homes. With the latter option, an investor would need to negotiate with 20 different sellers, conduct inspections on 20 houses located in different areas, and open 20 separate loans for each property. To avoid this headache, investors purchase one property with 20 units. Considering commercial real estate tends to be more complicated than a standard real estate transaction, there will always be a learning curve. To help accelerate that curve, take advantage of the Peak Commercial database. It is here where you can find the marketing tools and networking strategies necessary for a successful investment.
#6: Consolidated Property Management
Many investors who own single-family homes do not have the luxury of contracting an external property manager because it would not be a financially sound decision due to their portfolio size. Multi-family real estate investors, on the other hand, produce more income each month and have the flexibility to outsource property management services without the need to significantly cut into their margins.
The Peak Corporate Network
Peak Commercial’s network of independent, but affiliated companies is staffed by experts with the unique skill set and field-tested experience to help you navigate the complexities of the real estate business, make the right decisions, and maximize the value of your property. By drawing on the power of the Peak Corporate Network and its inclusive range of services, our clients save time and maximize the value of their assets. For help navigating the hottest 2017 real estate trends contact us today!