“There is always strength in numbers” is maybe an oft-used phrase but is the phrase that best describes multifamily real estate.
For the newbies in real estate investment, Multifamily Real Estate is a type of real estate that contains multiple separate housing units in one or within the same building or residential property, including townhomes and condominiums, duplexes, and other forms of multifamily properties. This type of real estate can house or accommodate multiple owners or renters, as individuals or families.
We all want to experience financial freedom and retire as early as we can. However, we are stuck with the misconception that working non-stop is the only way to achieve financial freedom. But we have good news for you! Here are the essential things about Multifamily Real Estate that will shift your mindset and allow you to work but do what you like while money comes to you!
1. Better Financing and Mortgage Loan Options
Whether you have been in the real estate business for a while or a modern young real estate investor with low funds, multifamily real estate is for you because it provides several and better financing and mortgage loan options that are within your reach. These mortgage loan options may include Conventionional Multifamily Mortgage, Federal Financing, Portfolio Loan, and Short-Term Financing.
The reason for these several and better mortgage loan options is that the financing for multifamily real estate is based not on your financial status but your property’s performance. Considering that the demand for multifamily real estate is high, lower mortgage financing rates are expected, which would greatly help the investors.
2. Multiple Forms of Monthly Income
Contrary to a single-family property that only has a single monthly income, Multifamily Real Estate generates multiple forms of monthly income, and additional income or numerous income streams mean bigger or increased cash flow. The cash flow advantage explains why real estate investors easily obtain loans.
Further, our need for roofs over our heads is a need that will never subside regardless of our economic status. Multifamily property investment will boost your monthly income cash flow without pretty much feeling exhausted because of the all-day work. To know more about how Multifamily Real Estate works, feel free to visit the Yankee Capital website.
3. Stability and Scalability
Since Multifamily Real Estate is an investment that involves the acquisition of multiple properties in one building, the practical consequence is diversification or an increase of an investment portfolio. Multifamily real estate is the most vital type of investment, even during a Pandemic. It allows you to live in one of your units while having the other units leased.
With or without a crisis, we all need a place to live. This need for a place amplifies the stability, not to mention your multi family properties business’s scalability. It is always a favorable situation to the investors considering that while you owe a mortgage loan to finance your business, your lessees or tenants are given the responsibility to pay for it.
4. Carries Less Risk
Multifamily properties involve several units of either the same or different sizes, shapes, or interior designs. Hence this also involves multiple other tenants or lessees. When there are multiple tenants, there are also multiple opportunities, making the possible risks involved considerably low.
While the vacancy automatically results in an income loss in the single-family home, the vacancy in one of the several units in multifamily properties is not an outright and absolute economic loss considering that income from other units can still compensate or alleviate the slight loss. In Multifamily Real Estate Business, it is always a winning situation.
5. Significant Tax Benefits and Advantages
Multifamily Real Estate Business also involves wear and tear or deterioration of the unit’s mechanical areas such as electricity, roofing, walling, or plumbing. Deterioration of some systems or areas in a unit is inevitable, which will lead to Depreciation. Depreciation is a legal and smart way used by investors to reduce tax liability.
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You may research ways to accelerate depreciation, such as cost segregation, to enjoy more tax deductions. Multifamily Real Estate investors want many tax benefits because the government always makes sure that these types of investors are being rewarded for providing housing or units for many individuals in the city. For the government, this type of business people must be given tax incentives to boost the economy.