If you have been a real estate investor for a long time, you already know well enough that a healthy cash flow should always be your goal.
For me, investing in multifamily properties is the best way to go since it’s much more sustainable than single-family investments. It has the ability to generate high monthly/quarterly returns on your investment based on these reasons:
The market is resilient and it is supported by a consistent increase in demand from different sectors. These include young professionals, students and retiring baby boomers who are downsizing.
If you purchase a 50-unit property, for instance, you can have only one management company to oversee its operations on a day-to-day basis. On the other hand, you will need to set up individual property management companies for every single-family house in your portfolio that are spread out across the whole city or may be in different cities altogether.
This is true in emerging markets where property values and rental rates are on an uptick along with jobs and median incomes. You can also include value-adding components that can help your properties generate new income streams on top of the rent your tenants are paying. The NOI increases and even if you keep the low cap rates, you will still get a high valuation, hence equity gain.
Of course, these are the basic reasons why investors like you and I are engaged in multifamily syndications. The bottom line is that we are able to generate large profits within a short period of time. For this, I would suggest getting your family, relatives, friends and other people within your extended circle of influence to invest with you in buying larger apartment homes. The economies of scale and management ease up as you acquire a larger number of units.
I won’t delve further into the benefits of multifamily investing here. I would like to focus more on what such a setup can bring aside from a steady income. For me, multifamily investments provide greater benefits to our lives and the lives of others. After closing 26 syndication deals, I was able to learn a lot not only about the real estate sector but also the experience of adding value to the lives of other people.
Let me share to you some of the positive effects that multifamily investing can bring other than cash flow.
If you keep your apartment complexes in good condition, chances are, you will be provided with tax exemptions from the government. This is because you are doing your part in developing the community by providing access to clean and safe housing. This entitles you to grants that enable you to renovate and improve the properties with the government’s support. This adds credibility to your name, making it easier for you to acquire more properties in the future.
Adequate housing has always been an important social need. For many people, it allows them to live their lives with less stress and hassle. In recent years, the high rate of homelessness has been a pressing problem that local governments in the US need to solve. That being said, investing in multifamily properties doesn’t only give you a chance to generate a large profit, it also enables you to transform communities for the better.
For example, if you bought an old apartment complex that’s almost uninhabitable, you can renovate or restore the property to its former glory. Updating the paint as well as changing the floors of the property can help raise rental prices and attract new investments into the community.
When you resurrect dilapidated apartment complexes, you are adding more to the housing inventory of the community. In other words, you are giving more options to people who are in need of decent homes. As the supply of apartment rentals increases, you help out even more people and generate cash flow in the process. They will be more than grateful to have rented out an apartment from you when there’s currently a housing shortage.
As you go acquiring multifamily properties here and there, you will meet new people along the way. These people will become a part of your network. They will eventually join your multifamily team as investors, financial managers, accountants, and property managers. You will be growing your list of potential business partners in the future. They can also serve as advocates who can open up more opportunities for you.
In this respect, we contribute to their goals and dreams by working with them and providing them with income. Many other people will also get the benefits, including the vendors, our management personnel and local business families. All in all, we contribute a lot to the whole process as we employ more people by going big.
Remember: Investing in multifamily properties is not always about cash flow. It’s about helping others and letting others help you out in return.