Why Invest In Multifamily?
A multifamily real estate investment strategy creates consistent and steady cash-flow for investors.
You can invest passively or actively
If you have cash but a full-time career, becoming a Limited Partner in deals is an easy way to get a 6-8% return and IRR of 20% (per year on your money). Savings accounts, stocks, nor crypto offer consistent returns and tax deductions… plus your sponsor can influence the deal, forcing appreciation.
Alternatively, you can buy, refinance, and manage a cash flowing apartment portfolio. Raise money from family and friends (Limited Partners) and get paid for beating your targeted returns. This requires liquidity, credit, relationships, and full-time focus.
Tenants pay rent, all expenses and pay down the loan creating equity
Tenants sign annual leases which include monthly rent and utility expenses. Rents cover all expenses, pays down the loan balance which increases equity, and leaves plenty of free cash flow for the owner and investors.
Get $17 for every $1 of profit (NOI)
If the apartments generate $10,000 in profit (NOI) and the cap rate is 6% that’s worth $166,666 in value! So, for every $1 created investors and banks will credit you $16.66.
Cash-flow potential
Once value-add business plans are complete, which typically take 3 years, you can refinance your and your investors equity out 100% and continue cash-flowing infinitely. Historically high occupancy rates mean predictable streams of income.
Tax advantages
Multifamily is a favored investment type in commercial real estate due to reduced depreciation schedules (27.5 years v. 39 years). Accelerated depreciation allows you to reduce it to 5 years which means you will likely pay $0 in tax even if you make millions in income.
Cheap debt and leverage
Fannie Mae and Freddie Mac guarantee loans so you don’t have to personally. They have $467B of cheap debt with low interest rates and interest-only loans. They will lend 75% or more of the price.
Inflation protection
Keeping your money passively invested in multifamily is a great way to earn 7-8% per year, which is way higher than banks pay you in interest. Although these investments are 3 years or longer you get continual cash flow, tax deductions via depreciation, and potential to grow your investment over 20% per year with value-add apartment deals.