Why Multifamily?

Many people have thought about or considered investing in Real Estate. There are many different types of real estate investing strategies that one could get involved in. These include Single Family Rentals, Fix and Flips, Multifamily Apartments, Commercial, Retail and Mobile Home Parks just to name a few. So why are multifamily apartments considered by most real estate professionals as the best investment strategy out there?

There are 5 main advantages of passively investing in multifamily real estate over any other asset class:

  1. Below Average Risk

    • The multifamily real estate market has proven itself over the years to be less volatile than residential real estate or the stock market. For example, in 2008 when the housing bubble burst the default rate on single family loans increased to 4% in 2010. By contrast the default rate on multifamily loans maxed out at 0.4%. So if you’re looking for an investment to protect you during a recession, multifamily apartments are one of the best out there.

  2. Above Average Returns

    • Multifamily syndications consistently return average annual returns of 10% and above. This is without volatility, after fees, inflation and even taxes. By comparison, the average stock market return over the last 15 years was 7.04%, but after fees, inflation and taxes it becomes a much lower return of 2.5%.

  3. Passive Income

    • Multifamily syndications provide monthly cashflow from the income generated by the property. This is not something you will see from stocks and bonds. In addition to passive income from monthly cashflow, you also benefit from the asset appreciating in value over time which is typically sold for a significant profit.

  4. Tax Benefits

    • Real estate has advantages over nearly every other investment out there because of the tax benefits it provides. The IRS allows multifamily investors to write off a percentage of the value of the building each year as an expense through something called depreciation. Depreciation reduces your taxable income and in many cases can eliminate it all together. The reason for this is the U.S. government wants people to invest in real estate; it’s actually a tax incentive, and it’s required by law. (See our Tax Advantages page for more info)

  5. Inflation Hedge

    • Another one of the beautiful things about multifamily investments is that the more inflation goes up, the more the apartment building appreciates. The Federal Reserve’s inflation target each year is 2%, which means all costs go up including rents. And for apartment buildings, as income goes up so does the value of the property.

As you can see, the benefits of multifamily apartments are fantastic and those considering investing in real estate should strongly consider adding this investment type to their portfolio.