Multifamily real estate investment is an attractive proposition to smart investors, and it has historically offered solid returns even in less-than-desirable economic conditions. In the following article, Travis Cadman discusses why multifamily property investment is the go-to strategy for wealthy investors. Travis Cadman is co-founder and CEO of Investar USA.
If your goal is wealth-building, you should look no further than real estate investment. More specifically, you should look no further than multifamily real estate investment. While I built a substantial portfolio with single-family home repositioning, I eventually embraced multifamily property investment as an exceptional proposition.
While single-family home repositioning can be an excellent strategy – and I know this from experience – multifamily properties offer far greater efficiency and faster return generation. Let’s say you’re in the market for a home. You purchase a four-bedroom, three bathroom home for $1.5 million. You renovate the property and wait for market conditions to justify a sale. If you had invested in a multifamily property, you could have rented out additional units and collected rental income to offset your carrying costs.
The above scenario is a fairly simple one, but it illustrates the general advantage of multifamily property investment. Multifamily investment generates a stable, tangible return. Here are a few other benefits.
There will always be demand for affordable housing.
Regardless of the state of the economy, demand for affordable multifamily housing will always be greater than the supply. The demand will be especially great during periods of economic downturn. While luxury housing will experience significant fluctuations, affordable housing will always be needed.
Cash flow diversification.
Multiple tenants reduce the risk of default – you’re effectively spreading the risk, so that cash flow isn’t affected during periods of unit vacancy.
It seems counterintuitive because multifamily property is almost universally considered a solid investment among financial professionals, but relatively few investors seek multifamily real estate. This is largely because new investors are skittish about the increasedresponsibility and capital demand when compared to single-family homes. This lack of competition creates excellent opportunities for high-value asset acquisition.
And these are only a few of the advantages of multifamily property investment – I haven’t even mentioned the myriad tax breaks! While you may think that there is a significant barrier to entry for multifamily investment, financial institutions are consistently open to lending on multifamily projects.
Simply put, multifamily properties give investors greater control over the returns. If you’re seeking financial security for the long-term (and who isn’t?) investigate the perks of multifamily real estate investment.
Travis Cadman: Real Estate Investment Specialist
For more than 30 years, Travis Cadman has achieved real estate investment success in single-family home repositioning and value-add multifamily property investment.