Real Estate has always been a solid choice for investors looking to make a consistent return from their investment decisions. If you’re involved in the real estate world, you’ll also notice some of the savviest investors continue to choose multifamily properties to build their portfolios. On paper, multifamily homes make sense because you can acquire multiple cash-producing rental units at the same time. But there are also some hidden benefits to owning a multifamily property that you may not have considered. Continue reading to learn why some of the smartest investors are purchasing multifamily homes.
Multifamily homes are a stable, profitable investment
The first thing that makes a multifamily property great is that you get to add multiple revenue streams to your portfolio at the same time. While the cost of acquiring a multifamily property may be higher than that of a single-family home, the combined revenue of all the rental units is likely to give you a better return on investment (ROI). And unlike single-family homes, multifamily properties tend to hold their value or even appreciate in times of economic downturn. People will always need a place to live, and that means these properties will make for a very stable investment.
They’re easy to acquire financing for and easier to manage than multiple properties
It’s not well-known, but it can actually be easier to obtain financing for a multifamily property than a single-family home. Due to their stable nature and consistent income, lenders are more likely to approve you for a loan. And if you’re an investor that wants to build their real estate portfolio quickly, multifamily homes are perfect for you. Not only will you be acquiring multiple sources of real estate income, but it’s also easier to manage those properties since they will all be in the same location. These benefits are why full-time real estate investors almost always include multifamily properties in their portfolios.
Owners can make use of the tax benefits
One of the hidden benefits of owning multifamily property is just how much you can save on taxes. For starters, you can deduct all the maintenance and repair expenses associated with the property. Many of the costs associated with operating a rental business can be deducted as well. The real savings though will come from depreciation. You can perform a cost-segregation study to benefit from massive tax savings on your multifamily property. In a cost-segregation study, you deduct the price of a usable asset over the lifespan of that asset. You can include furniture, external upgrades, and even the building itself in this study. Consider working with a tax professional to maximize your savings with cost-segregation.
Growing markets can lead to even better returns
Location is always an important factor with real estate, and that’s no different with multifamily homes. Savvy investors know that purchasing property in a hot market can lead to appreciation from increased demand. When combined with the solid appreciation that multifamily homes already provide, that can mean great returns for you as an investor. If you’re serious about investing in multifamily property, you should take the time to find a great market that will see your property increase in value.
They are ideal for property management
If you don’t want to manage the day-to-day operation of your rental property, you can always hire a property management company to do it for you. While it may not make economic sense to hire a management company for a small or single-family rental property, for a larger multifamily home it can be a perfect solution. Hiring a management company effectively turns your property into a passive-income-producing asset if that’s your goal or even if you just want more time to focus on other investments.
The easiest way to save on a multifamily property is to find a trusted lender who 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. RCN Capital also has flexible and competitive loan options available. Are you looking to purchase or refinance a multifamily real estate property? Connect with us today.