Multifamily properties are prevalent within the real estate industry and are among the cheapest and most affordable ways to own property. These properties often have two or more units under the same roof (Duplex or apartment building) and ensure a low vacancy rate due to the high demand.
If you are not currently investing in multifamily properties, now is your chance! The National Real Estate Investor’s sentiment survey released last month ranks multifamily as the most attractive commercial real estate investment type. We believe these properties will be quality investments for years to come, and here are our top 6 reasons why.
1. Affordable Acquisition Cost
Based on a per-unit basis, multifamily properties are much more affordable than other real estate properties. They require much fewer upfront costs, and if needed, you can receive a mortgage loan at a low rate. These multifamily properties are great ways to get your feet wet in the real estate industry due to the low entry cost.
2. Less Risk
Every investment is risky, but multifamily property investments are considerably less risk in the grand scheme of things than other significant investments. The two main reasons this is the case is that you do not need much money to start investing, and there is a shallow risk of total vacancy since there are multiple units on your property.
If you do your research and find a good location, you will have nothing to worry about and will end up making money.
3. Increasing Popularity
Nowadays, most younger individuals are more willing to rent rather than buy their own home or apartment. This is due to an increase in college debt upon graduation. Apartments and multifamily properties allow younger individuals to live in a superb location and start paying off their debt.
4. Prime Location
Many new apartments are being built in urban and suburban areas throughout cities worldwide. Nearly all suburban apartment properties offer great transportation forms, school systems and are incredibly safe. These factors have driven many property renters out of the city and into the suburban, multifamily apartments.
5. Steady Income
The NCREIF Property Index recently claimed that the average cash flow of multifamily property investments is 8.58%. Compared to returns on stock and mutual fund investments, this is a phenomenal rate. On top of this rate, there is the potential to hit it big and make much greater returns in the long run. Sometimes a bit of remodeling is all it takes to make a large profit.
6. Tax Benefits
Owning a multifamily property has many benefits, including tax benefits. Owning this type of property allows you to write off expenses such as advertising, insurance, property fees, etc. This will decrease your overall taxable income.
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