oo3:  Invest in THIS to Boost Your Passive Income

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Welcome back, passive income pals! We are financial experts on a mission to spill the tea about how to quit your 9-5, get out of the “grind” cycle, and build your own empire from passive income investments. 

Today we are talking about our chosen mode of creating passive income: multifamily real estate. 

The way we got into this business was actually pretty traditional. We first attended a live seminar, which led us to sign up for a mentorship program. Because lemme tell ya, investments are a whole new world and you need someone on your side. 

I mean, that’s why you’re here right⁉️

Through that mentorship program, we launched our single-family home flipping business and patted ourselves on the back thinking “Wow! This is great. We’re making good money and each house is doing and selling well!” 

We might have become slightly addicted to the hustle and stacked on more projects. But hey, in our defense we were making some serious money.

What came after single-home flipping?

After a few months in, we were pitched a commercial academy course and took the plunge of making the investment. And those two choices were the start of our career as real estate investors.

Choices, really, are what so much of this comes down to. When we were at the start of our real estate career after our years working in fashion, we knew we had to make a choice to do something different for our financial futures. 

We made a choice to break out of the day-to-day corporate life.

We made a choice that we can always make more money, but we can’t make more time.

And we made a choice to start an investors club, launch a podcast, and share everything we know with all of you. 

So, back to multifamily apartment real estate. If you’re here today and have never heard that term before, we are here to break it down for you. Let’s start with the upsides.

What is multifamily apartment investing?

When we talk about multifamily apartments, we’re not talking about duplexes or quadplex residents. We’re talking about the apartment complexes with 65+ units. They can also be referred to sometimes as economies of scale. With more units, it’s more feasible to hire property managers. Something that you can’t do with apartments with 65 or fewer units. 

This route offers you the minimum amount of time for a massive money return if you are a passive investor. 😌😌

Of course, for us, one of the major upsides of investing in multifamily real estate is the extremely low-risk profile. Now, is there such a thing as a no-risk investment? Nope. But a little strategy and a sprinkle of risk can reap great rewards. 

When it comes to investing your money, your number one priority should be principal protection. Our favorite moneymaker, Warren Buffet, once said, “Don’t lose money.” His second rule: “Don’t forget rule number one.”

The benefits of multifamily real estate investments

With that said, for decades, the multifamily real estate market has proven much less volatile than single-family homes, the stock market, and cryptocurrency. When the housing bubble popped in 2008 (what a terrible time that was), the delinquency rates on Freddie Mac single-family loans soared, hitting 4% in 2010. By contrast, delinquency on multifamily loans peaked at 0.4%. At its worst, the multifamily delinquency rate was 90% lower than that of residential real estate. 

Multifamily real estate consistently outperforms other kinds of investments. For the last 18 years, housing has generated much higher returns than the stock market, outperforming the S&P 500 2:1 since the turn of the century. According to statistics released by Fundraise, a $10K investment in the stock market afforded investors a 5.43% annual return from 2000-2016, while real estate came in at 10.71%.

Even when the stock market is at its best, real estate remains competitive; since 2011, both the S&P 500 and real estate have brought in roughly 12% in average annual returns.

Are there tax benefits to multifamily unit investing?

“I am totally loving the IRS!” said nobody ever.😵😵 When it comes to navigating the IRS, multifamily real estate has advantages over nearly every other investment, from stocks and bonds to business investments to precious metals. Uncle Sam allows multifamily investors to write off 1/27 of the value of the building each year as an expense. Additionally, due to the Tax Cut and the JOBS Act of 2017, the rule of depreciation has changed.

Let’s talk specifics. Let’s say you invest $100K and make a 10% cash-on-cash return. This means you are generating an annual cash flow of $10K, yet the US tax code allows you to claim a LOSS of about $7K. And those ‘phantom’ losses carry forward when you sell the property for a profit. 

Keep in mind, we are not CPA professionals. We’re only using this as an example. Your tax situation will vary, so please check with your CPA or other qualified professionals‼️

The best part? This is just the tip of the iceberg with regards to the tax breaks available to us as multifamily investors! To be honest, it’s taking everything in us to not say, “But wait! There’s more!” like some bad PBS special. But there totally is and with a little confidence, a calculator, and the Kitti Club, a passive income investors club for ordinary people like you, you can totally make your passive income dreams come true. Join the club here!

Okay, a little storytime. The first passive investments via apartment syndication we made were in 2018.  We invested $100K in a beautiful apartment complex in Dallas, Texas. And we’re looking at the K1 paper loss we got in February 2019.  😘😘

Do you see this?! While the property was cash flowing on day one, in the eye of the government, we had over $83,000 phantom paper loss! And let us tell ya, that’s the only type of ghosting we’re into.

If you’re listening to this episode and you have more questions about multifamily apartment real estate then good news we have some answers. Check out and download the Apartment Syndication Survival Guide here. Did we mention it’s FREE? 

And make sure you subscribe to the podcast for more info and help with your investment journey!

READY TO DIVE DEEPER INTO APARTMENT SYNDICATION?

Grab our Apartment Syndication Survival Guide Here

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