Multifamily real estate investing is becoming increasingly popular among both established and new real estate investors. The reasons for the growing popularity of this investment class include:
- Cash flow
- Tax Benefits
- Stability, and
- Creation of Legacy Wealth
Cash Flow
Obviously, cash flow is high on every investor’s list of why they invest in the first place. Multifamily properties make that a more viable and stable expectation. With a single family home, there is just one source of income – one tenant paying one monthly payment. However, with a multifamily property, there are, by definition, multiple tenants each paying a monthly payment. In addition, you have the added security of knowing that even if one unit of the property is without a tenant, the likelihood is high that enough units will still be occupied to provide significant cash flow.
In the case of multiple investors combining resources to purchase a multifamily property together, which is a common practice, investors are usually paid quarterly dividends on the net income generated by the property.
Tax Benefits
Tax benefit is another area to which investors pay close attention. Investments are made with an expectation of an increase on the invested amount. A multifamily property is not ordinarily resold for a lump sum. Instead of a quick return on the invested amount in one lump sum, the return on investment (ROI) is realized over time in the form of regular monthly tenant payments. As these payments are received, there are also regular repairs and depreciation that offset the investment profits, resulting in increased profits over the lie of the ownership of that property.
Stability
With the increase in work-from-home options due to the pandemic, more and more people have chosen to rent instead of buying a house and property. Since remote employment can be successfully accomplished from just about anywhere, growing numbers of people are traveling and experiencing life in various areas. Renting or leasing a residence allows more freedom to move around without the delays of preparing and selling a home each time the travel bug bites.
Because of the increase in those choosing to rent or lease rather than purchase a home outright, multifamily properties have become very popular. This offers a very sable investment for those real estate investors venturing into multifamily property investment.
Creation of Legacy Wealth
So what exactly IS “Legacy Wealth?”
Legacy Wealth also referred to as Generational Wealth, is simply wealth that is passed from one generation to the next as inherited wealth. Real estate is obviously a good vessel for building legacy wealth, but especially so with multifamily real estate properties. This is because even with tenants moving out from time to time, new tenants are usually waiting in the wings to move in. The income generated by multifamily properties is not reliant on a single unit. In fact, as mentioned earlier in this article, even if a unit remains empty for a little while – or even a few units – a larger multifamily property very easily could still generate enough income to cover those units until a new tenant moves in.
For a smart investor with a solid business plan for maintenance, repairs, and other quality and growth factors, this cycle of cash flow could easily continue for generations, thus creating legacy – or generational —wealth.
In A Nut-Shell
Multifamily real estate is one of the safest, high-yielding investment vehicles in the market, and here’s why:
- High apartment asset depreciation is written off against investor ordinary income resulting in low to zero taxes.
- Demand for rentals increases with every economic downturn.
- Retiring baby boomers will significantly increase rental and assisted living demand.
- Millennials have the lowest demand for home ownership and highest rental demand of any generation.
- Focusing on multi-unit complexes minimizes the risk of tenancy turnover, capital improvements, and property management.
Why Partner with American Made Home Solutions?
American Made Home Solutions LLC. is a privately held multifamily real estate investment firm specializing in the acquisition and rejuvenation of under-performing, multi-family properties, with a strategy of restoring distressed or under-performing properties into revitalized communities.
We raise investment capital through syndication and then drive forced appreciation strategies to deliver the highest returns to investors – averaging an ROI for investors of 14% to 22%.
We have a strong understanding of what it takes to balance front-end operations with back-end strategic planning. Leading through strength, respect, and a relentless pursuit of excellence, our diversity and depth of operational and management leadership experience within fortune 500 companies gives us a level of professionalism and exceptionalism that is unmatched.
Contact us today for a consultation. https://americanmadehomesolutions.com/contact/
