If you're like us, learning about the tremendous upside to investing in multi-family properties is exciting. The reality is it can dramatically increase your passive income streams over the next 2-7 years. Life is busy though, and sorting through the details can feel overwhelming. Here are a few things for you to think about when considering whether or not to invest.
Apartment values are based on net income, not market comparables
This is one of the most impressive benefits of multifamily investing. Consider that in a 150 unit apartment complex, raising the rent by just $15/month increases the total property value by more than $385,000. [(150 units X $15 X 12 months) / 7% Cap Rate]. Let’s see your Hedge fund manage that.
Returns usually beat the Stock Market
If you had invested $1 in the stock market in 2002, you’d have about $2 in 2018 (taking inflation into account). That’s no way to plan for a future of passive income for you and your family.
Multifamily Syndication Loans Are NEVER Dependent on Your Income or Credit
Multifamily syndication loans are based on the value of the property, not your own personal assets. In other words, investment in Multifamily Syndication allows you to get into a growth position with extremely limited personal liability. Passive investors do not sign on loans in a Multifamily syndication.
Multifamily investments are usually LESS VOLATILE than single-family Investments
During recessions, rent typically remains much more stable than home prices. And as homeowners are displaced due to rising mortgage rates and/or job losses during recessions, they turn to apartments, leaving multifamily values with small declines at worse and thriving at best during flat/negative markets.
Multifamily investing is a growing market
Millennials aren’t buying homes at expected rates, and their preference for renting started before the 2008 economic crisis.
Meanwhile, retiring baby boomers are moving to urban apartments - perhaps to be near their children who have opted for city living, or to take advantage of the perks of city life themselves.
Finally, the overall market is shifting to a rental environment. Homeownership rates are falling, and have been falling for over 12 years. Even the National Association of Realtors has acknowledged this reality.
Even if you're an inexperienced investor, now is a great time to learn more about investing in multi-family properties.
Want to start building your multifamily investing portfolio? You can click here to see what one of our (past/closed) projects looks like.