Multifamily investing is a smart strategy that experienced investors use to build strong real estate portfolios and accumulate wealth. These properties offer many wealth-building advantages when compared to other asset classes or even single-family rentals. As interest rates begin to stabilize, it also presents a great opportunity for investors to acquire one of these desirable properties. Brokers and lending partners can also utilize the benefits of multifamily investments to help their clients succeed and maximize portfolio ROI.
In this piece, we’ll cover the benefits multifamily properties can bring to investors, and how lending partners can add value to their clients’ portfolios by branching out into multifamily investments.
Multifamily properties have always been a popular investment, because it allows investors to acquire multiple cash flow generating rental units in a single purchase. Multiple units translates to stability, as it diversifies income and provides a higher cap rate and profit margins. Owners are less affected by vacancies, because the income generated by other units helps cover the loss of rent from the vacant unit. They can also benefit from economies of scale; maintenance and upgrade costs are spread out across all the units, and it’s often easier to manage a number of tenants in a single property than having multiple investments spread out across a geographical area.
For investors that prefer a hands-off approach, multifamilies are also the ideal candidate for property management. They can hire professionals to handle day-to-day operations, allowing them to focus on other tasks like growing their portfolios.
Let’s talk about some of the biggest advantages multifamily investments can bring to a real estate portfolio:
We want to mention some important trends to keep an eye on in the multifamily space. There is still rising demand for affordable housing, which is keeping both prices and rents high for multifamily properties. As a result, acquiring a property can be difficult, but investors are rewarded with increased profit margins. Additionally, there has been increased interest for multifamily homes in suburban areas, mostly for duplexes, but also triplexes and quadruplexes. Interest rates have also started to have an impact on financing, allowing more and more investors to be able to afford larger acquisitions. This creates a great environment for lending partners to meet the growing demand of these investors.
Lending partners play an important role in their investors’ success, not just providing them with suitable financing, but also in guiding their acquisition and growth strategy. Providing value beyond the deal helps ensure that a strong working relationship can be built, leading to future opportunities for repeat business.
For example, brokers can help clients conduct due diligence, identifying high-demand markets and areas that will allow their investments to perform well. You can also educate clients on the importance of risk management, including how to swiftly deal with vacancies, good property management techniques, and how diversification strengthens a portfolio. It can also be good to check in with clients a short while after a deal has closed to see if things are going smoothly, and to start the conversation about future acquisitions using creative structures like refinancing or portfolio loans.
In order to maximize the returns on your clients’ investments, partner with a lender that can provide you with the best leverages and rates. 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 new construction financing for real estate investors and lending partners. If you are looking to offer rental property financing to your clients, RCN Capital has competitive loan options and an award-winning broker referral program available to partners.