156: So we Said NO to Single Family Homes
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A Galaxy Far, Far Away…
Once upon a time ✨, we found ourselves standing at a crossroads in our real estate journey. We thought we were making all the right moves, but as time went on, doubts started to creep in.
We were two fashion business entrepreneurs, not exactly experts in cash flow or market conditions.
But we had some extra cash and wanted to invest it in something tangible. That’s when we thought, “Why not try our luck in the world of single-family rental homes?” Seemed like a no-brainer at the time!
This Made Sense (at First)
In the beginning, it made perfect sense.
We saw a chance to make some money and grow our wealth 💰.
But as time ⏰ passed, we began to see what we had been missing out on—a much more lucrative option: multifamily apartment syndications.
It was as passive investors that we were introduced to this whole new world of possibilities.
Looking back, we couldn’t help but wonder why we hadn’t explored this path right from the start. It was a revelation that left us both excited and a bit frustrated.
2023 Bby
Let’s fast forward to June 2023, a truly momentous month for us. We’re right on the edge of saying goodbye 👋🏻🙋🏻♀️ to our very last single-family property, and the sense of liberation is absolutely incredible.
Owning those single-family homes come with a whole bunch of strings attached, and it’s something that often goes unnoticed in the beginning.
Hidden Strings
First things first, let’s talk about the elephant 🐘 in the room: liability.
👉 When you own those single-family properties, they usually fall under your personal name.
You might be asking, what does that really mean?
Well, it means that if any accidents or injuries happen, you could find yourself in a legal mess.
But wait, there’s more! We also had to bear the weight of personally guaranteeing the loans and putting our personal assets on the line. The fear of losing everything we had worked so hard for was always there, hanging over us like a dark cloud.
But that’s not all.
The financial returns we got from our single-family rentals were far from impressive.
You see, we had invested in these shiny, newly constructed properties 🏘️, hoping for a steady income stream. Little did we know that putting all our eggs in one tenant’s basket was a risky move we couldn’t afford.
Let’s be real, there’s really no such thing as a perfect renter, and we encountered tenants who wreaked havoc on our properties, skipped rent payments, or vanished into thin air.
Maybe you’re thinking, “this wouldn’t happen to me”, well hopefully, but dealing with these unique challenges of single-family rentals had us in a constant state of anxiety. 😰😨
Luckily, with our last property, we had a stroke of good fortune.
The tenant was responsible, and there were only minimal damages. We breathed a sigh of relief when a buyer quickly snatched it up.
But here’s the thing, we know we can’t take our luck for granted.
Horror stories 👻 float around about rental properties that seem like cash cows, only to be torn apart when a nightmare tenant finally moves out, leaving destruction in their wake.
All those profits you’ve been steadily collecting over three to five years?
They can vanish overnight, swallowed up by repairs and replacements. It’s like a never-ending nightmare that small-scale single-family homeowners, unlike those big corporations, struggle to absorb. It’s a harsh reality that keeps us on our toes.
5 Reasons why Multifamily is Superior to Single Family
So that’s the not-great side of things, but let’s dig in and explore why 🏢 multifamily apartment syndications are hands down a better choice than owning a small portfolio of single-family rentals.
Get ready for a fresh perspective on this investment strategy as we uncover five lesser-known reasons that will make you rethink your approach.
It’s time to discover the untapped advantages of multifamily apartment syndications! 🤩🤩
✔️ First, we want to discuss a major one: liability.
When it comes to single-family properties, it’s a real concern. These properties are usually in your personal name, which means any accidents or injuries that happen there can land you in legal trouble. Not only that, but as the owner, you’re also personally on the hook for guaranteeing the loan, putting your own assets at risk.
Now, let’s flip the script.
With multifamily apartment syndications, things change. As a limited partner/passive investor, you enjoy something awesome: limited liability. That means you’re protected from personal liability for accidents or injuries, creating a more secure investment environment.
✔️ Next up for consideration are loans and loan limitations.
Single-family rentals come with some limitations.
You might not know it, but there’s a cap on the number of mortgages an individual or couple can have, usually up to 10 properties, or 20 if you’re a married couple. That cap can seriously put a damper on your plans to expand your real estate empire. ☹️☹️
The good news is that multifamily apartment syndications are a whole different ball game.
With multifamily apartments, there are no restrictions on the number of properties you can invest in. 😎😎
You have the freedom for exponential growth, and that means unlimited potential to maximize your returns.
Managing single-family properties can also eat up a whole lot of your precious time, which is very valuable. Dealing with tenant problems, handling property maintenance—the list goes on and on. It’s a never-ending juggling act that can quickly drain your energy.
With multifamily apartment syndications, you get to kick back and be a passive investor. 🍹
The property is run smoothly, and a professional property management company takes care of all the nitty-gritty day-to-day stuff. It’s a hands-off approach that gives you the freedom to focus on other aspects of your life while still reaping the financial benefits. 🤓😍
You also benefit from resilience through diversification.
What this means is simply when you own a single-family rental, your income hangs on the whims of one tenant. If that tenant decides to bail on paying rent or causes havoc to your property, you’re left holding the bag, facing all the consequences.
In multifamily apartment syndications, you’re shielded 🛡️ from those risks.
How? Well, with a bunch of units and tenants in the mix, the impact of non-payments or delinquencies gets spread out across the entire property.
It’s like a financial safety net, reducing the strain on individual investors like yourself.
This diversification of income sources creates a buffer against potential setbacks, making your investment model more stable and resilient.
It’s like building a fortress that can weather the storms of life. 🤟💛
✔️ Last, but not least, let’s examine taxes.
When it comes to multifamily apartment syndications versus single-family rentals, there’s a clear winner.
Multifamily investments have some serious tax benefits that blow single-family homes out of the water.
We’re talking about things like depreciation and cost segregation, which can lead to some major tax deductions.
This means you get to keep more of those hard-earned investment returns in your pocket. 💋
It’s like a gift from the tax gods, really.
Compared to single-family rentals, multifamily apartment syndications offer a higher level of tax efficiency, giving your overall financial gains a real boost. Uncle Sam is on your side, helping you maximize your profits.
The Big Picture
Here’s the deal, we think it’s pretty clear that multifamily apartment syndications have a multitude of advantages over single-family rentals.
So, if you’re looking for a fresh perspective and a path to financial success, it’s time to consider the world of multifamily apartment syndications. 🧐🧐
It’s a total game-changer that can revolutionize your investment strategy and open doors to unparalleled opportunities.
If you haven’t already, get ready to embark on a new chapter filled with prosperity and growth.
GET ME ON THE KITTI FREEDOM CLUB
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