114: Real Talk: 6 Pros and Cons of Multifamily Investing
Multifamily investing is all the rage right now, but is it really all it’s cracked up to be? 🤔🤔
In today’s episode, we’re going to break down the pros and cons of multifamily investing and what you can expect if you decide to take the plunge.
in 4 short years, we have accumulated over $270,000,000 in our 🏢 multifamily apartment real estate portfolio, so it’s safe to say we know a thing or two about multifamily apartments.
👉 Today, we’re going to share with you everything that we’ve learned about multifamily investing so that you can make an informed decision on whether or not this type of investment is right for you.
Let’s get into it!
Navigating the ever-changing waters of real estate investing can feel daunting, and the debate between 🏡 single-family and 🏢 multifamily properties only adds to that confusion.
We would be lying to you if we said that there weren’t advantages and disadvantages to each type of property when it comes to exit strategies, management style, income earned and more–not to mention how lenders and investors view them differently.
But don’t be fooled by the length of this debate: learning the basics about both types of properties will provide you with a strong foundation for making educated decisions on your path toward successful investments. So pull up a chair, grab some snacks and take some notes.
Like, a lot of notes. 🤓🤓
First things first: what’s the difference between Single-family and Multifamily properties?
Let’s keep it simple. Single-family properties often involve renting out individual properties.
On the other hand, 🏢 multifamily investing involves owning and renting entire complexes such as apartments.
For the Kitti Sisters, think of large complexes with up to 200 to 300 plus units.
Let’s dive deeper into some of the differences between multifamily apartment investing and single-family properties and the benefits associated with it. 🧐🧐
NO. 1 Multifamily Apartments usually produce larger cash flows.
Investing in a multifamily apartment property offers investors an opportunity to generate bigger cash flows than single-family properties. Aside from multiple monthly income streams, multifamily apartments provide other innovative income sources.
Plus, since rent is split among the units, this means potentially more stable rental incomes and fewer vacancy losses compared to a single-family property. For investors looking to fund their retirement with passive income, a multifamily investment can yield returns throughout the years.
NO. 2 More Control Over the Property’s Value
Multifamily apartment properties provide more bang for your buck – literally. 💵
These investments are highly valued because they offer multiple sources of reliable income, which can range from income from the rent to charging for pet fees, valet trash, washer and dryer, covered parking, and everything in between.
This means that when you invest in a multifamily apartment property, you’re getting greater control over what your asset could be worth down the line. 😘😘
And since a multifamily apartment’s value is derived from the income it produces, the ability for investors to control the multifamily income streams the property produces provides certainty and control over what the property’s valuation will be in the future. 😉😉
Multifamily apartment investing puts the control back in investors’ hands. 💪
Rather than relying solely on appraisals or comparative analysis of surrounding single-family homes, the value of multifamily investments can be determined by the income it produces.
This is a major factor for buyers and sellers alike because it confirms your asset’s worth with hard data and not just an educated guess.
NO. 3 Larger Pool of Tenants
The appeal of multifamily properties to investors is clearly evident in their lower-risk status.
Where single-family units can cause financial strain when they’re vacant, multifamily apartments offer better protection as far as income is concerned – providing a larger pool of potential tenants that should help ensure full occupancy and inhibit the loss or devaluation of investment capital. 😊😊
Think about it; it’s a win-win 〰️ investors are able to benefit from the greater economic stability that comes with multifamily apartment complexes, and residents get a wider selection of rental options for themselves.
NO. 4 Scalability
Multifamily apartment investments offer a unique opportunity to turn your real estate dreams into reality.
On a practical level, multifamily investments epitomize scalability.
So, if you’re looking for an efficient way to take your investment to the next level, choosing multifamily investments is an excellent way to move forward with your growth plans.
What’s more, this route allows you to experience the satisfaction that comes with purchasing larger units in greater numbers!
Talk about efficiency and efficacy! 🤩🤩
NO. 5 Suited for Professional Management Team
The appeal of multi-family apartment properties is clear when it comes to the potential for hiring a property management company.
While single-family residences may lack the flow of revenue needed to make bringing in a professional worthwhile, multifamily properties can easily generate enough revenue to allow an investor to relax and let someone else deal with day-to-day operations and pesky repairs. ✨
The fewer problems a landlord has to tackle personally, the more time they can focus on increasing their returns!
NO. 6 Tax Benefits
Investing in multifamily apartment properties is a great way for property owners to maximize their profit margins.
The tax benefits are truly extraordinary and beneficial to anyone owning or renting out multiple units.
Thanks to cost segregation, investors can take advantage of bonus depreciation when investing in a multifamily property, meaning there’s potential for substantial cost savings over time. 😍😍
Even better, the income from rental units offsets taxes and other costs associated with ownership, helping to bring the total investment costs down significantly.
With all these advantages, it’s no wonder that many successful landlords are jumping on board with multifamily investments.
👉 We hope this gave you some insight into why multifamily apartment investing was the best choice for us, and if you have comments or questions, please drop us a line – we love hearing from you!
While you’re at it, share your new wealth of knowledge with your friends and family!
As always before making any investment, always consult your team of professionals! 🙌
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