Thinking about investing in multifamily properties?

Published on: 30 July 2020

Here are the top 6 questions to ask.

Multifamily apartment investing is one of the smartest things you can potentially do with your capital. Multifamily properties typically hold their value over time, and they usually increase in value based on income (not comparables), and they offer excellent risk-adjusted ROI.

That said, there’s a lot to consider when deciding whether or not to become a multifamily property investor. Here are some important factors to consider.

How long does it take to recoup an investment in a multifamily apartment complex?

Typically, you’ll receive quarterly dividends for your investment after an initial stabilization/rehab period. Typically, syndication companies such as ours are projecting that your investment will double in 5-6 years.

If you’re looking for a highly liquid investment, multifamily investing is not for you. If you’re looking for a comparatively high rate of return via an attractive risk-adjusted investment vehicle, multifamily investing is one of the best options on the market.

 Will I have to do any work on the property once I invest?

No. We employ a professional team to manage the property. As an investor, all you have to do is invest the initial funds and then watch your investment return dividends and equity gains.

How much of the split will I keep as an investor?

This depends on the property. Our most recent investment, The Griffin at Petworth in Washington, D.C,  offered an 80/20 split for investors. Others may do 70/30 or 60/40 splits with the most going to investors.

What is the minimum investment?

Each property is different, but typically there is a $50,000 minimum investment. Some properties offer $25,000 minimums.

What are the tax implications of  multifamily investing?

When you invest in multifamily properties, you can typically expect prorated depreciation benefits that will lower your taxes (general statement, tax levels are different for everyone). Talk to a CPA to learn how your personal finances will be impacted.

How do I choose the right property?

Choosing the right property depends on your goals. First, you need to decide whether you’re more focused on short-term or long-term gains. Class A properties will have more long term gain, while Class C will have more short term gains but a shorter project lifespan.

Second, decide how much you want to invest and find the right syndication company that will offer a competitive ROI. It’s best to discuss your options with a professional.