6 Benefits of Multi-Family Investing

Published on: October 23, 2020

Many persons hear about multi-family investing, but they’re not sure of the benefits.

As someone who more than likely has rented property in the past, you are in a great position to understand this option and the benefits.

Let’s have a quick look at 6 benefits of multi-family investing

1. Multi-family real estate is a recession-resilient investment

Most investors are expecting a recession following the effects of the current pandemic. And with stocks soaring, many are also considering whether it’s a bubble. But one investment that stands the test of time during bear and bull markets is multi-family real estate investment.

So, if you’re looking for an option to round out your investment portfolio, this is a good place to start.

2. Demand for apartment rentals is rising

According to the Pew Research Center, more households are renting now than at any time in the past 50 years. Between the 10-year period from 2006 to 2016, the number of households grew. But renters outpaced homeowners in that growth. Fast forward 4 years later to 2020, and the US Census Bureau indicates that rental vacancy rates have decreased and median asking rent continues to increase.

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The asking price for sale units has also decreased.

While the economic downturn will impact apartment demand, the overall growth rate is sufficient to absorb new supply entering the market.

3. Apartments offer a steady stream of income

The statistics show that the apartment rental market continues to increase in demand and, therefore, value. So, you have an opportunity to diversify your investments into an option that delivers a steady income stream which you can expect each month.

Apartment or multi-family units offer better economies of scale and thus higher returns on investment. As of August 2020, the NCREIF Property Index estimated annualized returns over a 5 year period on real estate investment at 5.79%.

4. They are true passive income sources

We’re often told that wealth starts with building passive income streams, where your money continues to work for you. And nowhere is this more evident than in a multi-family investment.

Without needing to lift a finger to maintain your properties, your investment in a multifamily unit(s) continues to yield income month over month. Plus, your property continues to appreciate as time goes by.

5. The tax advantages

Multi-family real estate investment offers high tax-advantages.

If you use a mortgage to finance your investment (which most savvy investors do) you can take a high mortgage deduction in the first year of ownership.

Then, you can depreciate the property. This is important because you can set off this depreciation against your rental income.

This alone makes multi-family real estate investing an attractive option, especially for those savvy with the tax laws.

6. Multiple ways to get involved in multifamily investment

There are multiple ways to get involved in this type of real estate investment. You can take the most passive route and invest via syndication. Or you can invest in a multi-family fund or a real estate investment trust (REIT).

Next steps – how to take advantage of the benefits of multi-family investing

If you want to learn more about how to get started in multi-family real estate investing, here are two ways to get started:

1. Join the Xsite Capital newsletter. Our subscribers get access to exclusive content to start, nurture, and grow passive wealth through multi-family real estate investing.

2. Check out our top 8 books and top 7 blogs on multifamily real estate investing.