Investors love multifamily real estate, and it’s no surprise why when you learn about the benefits of owning such a property. Multifamily homes are seen as a very stable source of income since they are made of multiple cash-flowing units. They are also easy to obtain financing for due to their consistent nature. Naturally, their many benefits lead to these properties being in high demand, which also means they are priced much higher than single-family properties. Despite their higher cost of entry, we believe that multifamily real estate is a great addition to any serious investor’s portfolio. In this post, we cover the main reasons you should consider a multifamily property for your next real estate investment.
Multifamily property is great if you are looking to build a solid real estate portfolio quickly. That’s because with multifamily homes, you can acquire multiple cash-producing rental units at the same time. For this same reason, the yearly return-on-investment (ROI) on these properties is often higher than with single-family homes, despite the property itself costing more. Even if a unit is unoccupied for one reason or another, the other units will continue to produce income for you. Wise investors will take this time to renovate the unoccupied unit, increasing your total monthly revenue even further.
Another reason to acquire multifamily property is that it’s a wise investment over time as well. As mentioned these types of homes produce significant income, which keeps them in high demand. That means these properties tend to appreciate in the long-term, on top of the revenue they provide for owners each month. That’s why we consider multifamily real estate to be perfect for serious investors. It’s one of the most stable forms of real estate investing, and if you are looking for a way to keep your wealth safe in the long run, multifamily property may be great for you.
Multifamily properties have the added benefit of being easy to obtain financing for. Since they are viewed as a very stable investment, lenders will be more likely to approve you for a loan, especially with a hard money lender. These types of lenders will generally be more concerned with the profitability of the investment than with your credit and personal finances, which makes multifamily homes perfect if you have a less than stellar credit history. Along with being easy to finance, multifamily properties are much easier to manage than owning multiple single-family rentals in different areas. You can even look to hire a management company for day-to-day operations, effectively turning your investment into passive income.
Your multifamily property can bring significant advantages to you come tax season. First, operational costs like utilities, maintenance and repair expenses, and property management fees can all be deducted. You can also perform a cost-segregation study to take your tax savings further. This is a common method used by many real estate investors where you depreciate the value of assets on the property over the usable lifespan of the asset. The building itself will be included in the study, but even things like appliances, furniture, and external upgrades can be included as well. Work with an accountant or tax professional to maximize the savings on your investment with depreciation.
Looking to add a multifamily home to your real estate portfolio? RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and vacation rental financing for real estate investors. If you’re looking to finance your next multifamily property, RCN Capital has competitive loan options available. Connect with us today to discuss your next real estate investment.