Making the first step in real estate investment is an excellent means to make your money work for you. When making a decision on the property type that you want to invest in, there are few better options than multifamily investing.
Investing has many risks and benefits involved and often takes careful deliberation and close analysis of various different factors.
Here we will closely discuss what real estate investment is, how you can invest in a large-scale asset such as a multifamily property as an individual investor, and the benefits of investing in a multifamily property.
Table of Contents
What is Real Estate Investment?
Real estate investing involves the investment of funds into chosen real estate options. There are many different forms of real estate that are available. Some of these property types include:
- Multifamily properties
- Commercial properties
- Smaller individual properties
- Building projects
- Struggling estates
These various different forms of real estate investment provide investors with a large room for financial growth.
Before deciding on a property type for your first financial investment, it is important to understand each property, how it functions, as well as the benefits that each one provides.
Is Real Estate Investment an Effective Form of Investing?
Real estate investment is an old and proven method of investing. In most other forms of investment, such as the stock market, there is often a high level of risk involved. Within the blink of an eye, your investment could vanish due to market fluctuations. What makes real estate investment so appealing is that your assets never truly vanish.
This is because when you invest in real estate, you have physical assets that cannot simply vanish. The only downside to this form of investment is that it takes a long time and thorough research is needed to understand each investment and the possible market trends that may affect your investments.
Is there Another Way to Attain Large-Scale Assets and Higher Purchasing Power as an Investor?
The answer to your question is yes! There are many different ways that an individual investor can obtain a stake in large-scale assets such as multifamily properties. The best way is through the formation of investment syndication.
Syndication is when a pool of investors merges their investment capital to achieve a higher purchasing power.
When obtaining a large-scale multifamily property, the initial cost of the real estate type is often large. Syndication provides needed sufficient funding to undertake these large-scale investment types.
Benefits of Syndication
The main benefit of syndication is that it increases the financial benefit that an investor could receive. This is done by widening the possibility for investment and securing real estate assets that are more financially beneficial.
In most cases, large-scale assets like multifamily properties and office buildings are unattainable by individual investors due to the large purchasing power required.
Syndication removes this barrier and allows the investors to obtain the asset and split the generated income by a predetermined amount and percentage.
What is a Multifamily Property?
A multifamily property refers to a large-scale real estate investment property that can house multiple families and people. This often refers to buildings such as:
- Apartment buildings
- Bungalow courts
- High-rise apartments and condominiums.
- Residential property
This real estate investment type provides the investor with a myriad of various different benefits. These benefits all work together to ensure that the financial investment is a complete success.
Benefits of a Multifamily Property
Now that we have discussed the alternative solution for individual investors to invest in large-scale assets through the collective efforts of syndication, as well as what a multifamily property is.
Let’s have a closer look at some of the benefits that come with investing in a multifamily property.
Consistent Rental Income
What makes multifamily and rental properties the favorite option for real estate investors is the consistent flow of rental income.
Due to the nature of multifamily investment properties, these large-scale real estate assets provide investors with a constant and high monthly income. The more residents stay in the building, the higher the monthly return.
Rent is also predictable and not as volatile in nature. When a tenant leaves, it is often easy to find another in their place which maintains the high-occupancy level of the real estate asset. This high-occupancy level is what contributes to the steady cash flow that the asset produces on a monthly basis.
Multifamily housing is often easier to manage than most forms of real estate. This is because there is only a requirement for a few administrative staff, and of course security. The rest of the property, and the apartments, are often maintained by the residents themselves.
The only time that an owner needs to repair and maintain an apartment is when it has been left in disarray by a departing tenant.
When looking at a multifamily property as a whole, it is easier to manage because of how close the units are together. If you invested in multiple real estate assets all over the country, it would be difficult to be everywhere, all at once.
Since there are many housing units within the multifamily property and all under the same roof, it becomes a much easier task to manage and check up on the condition of your real estate asset.
Hiring a property manager or property management company is generally the best course of action as they can handle the day-to-day running of the property without you needing to always be there.
Compared to other forms of real estate, multifamily properties are more often cheaper to build and purchase. If an investor takes out a mortgage payment to acquire the building, these also come at a much lower total range than other forms of real estate.
When building, it becomes more affordable when looking at it from a unit development stance. It is cheaper to develop multiple closely linked rental units under the same roof than completely separate buildings.
The foreclosure rate on these multifamily properties is significantly lower than that of single-family homes. It is generally easier for mortgage lenders to find a competitive rate for investors when it comes to multifamily properties.
The operating costs, and cost to acquire are affordable whilst also providing you with long-term additional income that is higher than its initial purchase price.
Many investors are unaware of the tax benefits that multifamily homes provide. These tax incentives are provided by the government to investors because of the fact that you are supplying a large amount of housing to the population.
Since there is a shortage of housing, the assistance that your building provides takes sufficient stress off the government to focus on developing more real estate that matches the demand.
Depending on the type of property, you can receive various different tax incentives that are beneficial to your investment. These incentives allow you to enjoy a larger revenue pool without having to worry about the majority of it going toward tax.
What makes multifamily investments so attractive to investors is that they maintain their property value.
Not only do multifamily properties maintain their value, but they have a much higher percentage increase in appreciation than other forms of real estate assets. Through simple maintenance, your multifamily property’s value can increase.
With this maintenance, and a boost of visual appeal, so too can the price of your rentals increase. Having a well-maintained building that offers affordable living at a competitive rate can substantially boost the intake of potential renters.
Investing in a multifamily property is a great way to boost your total portfolio growth. Since there is a consistent stream of monthly income that comes from these real estate assets, it allows you to invest in other projects more seamlessly. When revenue is consistent, it becomes easier to invest at a higher rate which boosts the performance of your real estate portfolio.
Having multiple investments in different regions is a great way to diversify your property portfolio and steadily increase the total revenue that you receive from your assets. Having a diversified portfolio is a tried and proven method for successful real estate investment.
Investing in multiple multifamily properties is an exceptionally strong way to boost and maintain your property portfolio.
Make the Right Decision on a Good Investment Fund
Choosing the right investment partner in real estate does not have to be as difficult as it may seem. We are a pooled fund of investors that is geared toward the real estate market.
Our team utilizes innovative and cutting-edge technology that provides its investors with the information and tools necessary to see clear and positive growth within their investment portfolio.
In the past, it was difficult to obtain quality real estate assets without being an institutional investor, but we have changed this by providing its investors with high-quality investment options that match institutional levels.Get in touch and start your sound multifamily investing with us to obtain real estate assets that will take you and your investment portfolio to the next level. Email us at email@example.com or contact us at 949-881-7128 at Saint Investment today!
President of Saint Investment Group
Nic is a two decade seasoned expert in investing and capital raising, specializing in Real Estate and debt markets. With Saint Investment Group, he leads large-scale distressed asset purchases and innovative syndications for investors.