As far as property investment is concerned, you need to seek advice from an experienced investor. Multifamily investing is a hot topic. A good number of investors have developed empires by investing in multifamily property. Most of them have portfolios that boast of holding on to similar properties even today!
About multifamily property
It refers to a complex or building having several residential units. It is usually divided into different rental units. Each will have a different tenant. Traditionally, units are self-contained, with each having its own bathroom and kitchen. However, there also exist shared amenities like outdoor space. Co-living is a new sector that is gaining popularity these days. Renters get to use individual bedrooms within the unit as well as share common areas. People from diverse backgrounds can stay in such properties as retirees, students, working professionals, families, etc.
Benefits of investing in Multifamily properties
1. Passive income:
Such investments are likely to offer excellent passive income. Cash flow can be in quarterly or monthly form from rental payments. Occasional work will be required, like replacing AC units, frozen pipes, damaged dryers and washers, etc. However, a properly trained property management group combined with qualified asset management can help streamline property work. It is achieved by economies of scale. Syndication companies and fund managers can ensure passive income. Investment companies are sure to cover the time and cost of investments needed for real estate investment portfolio maintenance and upgrade purposes.
2. Steady and consistent cash flow:
Investors prefer the residential real estate industry since it offers reliable cash flow, like rent paid by tenants. Being predictable, rent is unlikely to change every month. Moreover, units can be released and departing tenants replaced, thereby ensuring high occupancy levels at all times.
3. Diversification:
Since there are several tenants, it helps reduce risks. Perhaps you have a single family. Your sole tenant might need to relocate to another state for some reason. You will then need to find a new tenant to derive 100% of your future income from the property. If your apartment building has four units, then if one tenant leaves, you lose only 25% of your income, which can be replenished quickly. Thus, making multi-property investments in different areas is sure to enhance diversification benefits.
4. Lower risk:
The fact is that investments, in whatever form they may take, come with some risk. The same holds true for real estate. But in this particular asset class, the one considered to be the least risky is multifamily property. The reason is that this type of real estate industry offers something that tends to underpin the current stagnant economy. Commercial estates are exposed to unpredictable economic shocks, and there will always be a demand for rented units. Using a fund to invest in multifamily properties will mean professionals will screen your investment. Thus, you will come across properties that can withstand downturns as well as attract quality tenants.
5. Ease of scaling:
The initial multifamily portfolio that you acquire can help you create a diversified real estate investment portfolio. You can scale it easily, including triplex or duplex whenever desired.
6. Earn preferred returns:
This is limited to those considering private equity real estate fund investment. Instead of directly owning them. Such investors tend to earn preferred returns. Thus, you can earn higher returns and better cash flow. When you earn a return on your investment, you will be the first to enjoy it. You may invest in real estate syndication or a fund providing an 8% preferred return. In such a case, this fund will pay you 8% before making any profit for yourself. Thus, you derive additional protection from your investments.
Therefore, multifamily property investment can help you develop a wonderful property portfolio.
