What is Multifamily Investing? Your Guide to Lifelong, Lucrative Investments
According to Statista, the multifamily market is exploding, with over $487 billion in multifamily lending in 2021 alone. If you're an investor looking to capitalize on critical opportunities, you'd be crazy not to get into multifamily property. The upside can be absolutely lucrative.
At privately held commercial real estate firm, QC Capital, accredited investors have capitalized immensely on this boom in multifamily real estate. Specializing in the acquisition, repositioning, and management of institutional-grade assets, the experts of QC Capital help provide the cash-positive, diversified portfolio investors crave.
If you haven't capitalized on the numerous, potentially lucrative benefits of multifamily property, now is certainly the time. Learn how to reliably, diversely, and profitably enjoy multifamily investments everywhere.
What is a Multifamily Property Investment?
Real estate is undoubtedly a primary wealth driver for investors everywhere, especially under inflationary pressures and other forces of economic duress. Multifamily real estate is no different. Real estate investing in multifamily properties can be extremely advantageous.
However, multifamily property investing has only just recently gained the massive, exponentially accelerating attention we now see.
What is multifamily investing, you ask?
Multifamily investing is a type of real estate investing in multifamily properties such as apartment buildings, condominiums, and other properties accommodating multiple tenants. These investments are highly desired because they can generate greater cash flow and operating income than can rent payments from single-family investments.
What Constitutes a Multifamily Building or Property?
A multifamily property is a type of residential property with two or more living units. Nowadays, with advances in utility and ingenuity, single-family homes can be converted into multifamily properties. With renovations, additions, and creative restructuring, investors can turn one unit into many. In some cases, investors may live in one unit while renting out adjacent others.
The most lucrative multifamily property investments typically include:
There are generally three types of apartment buildings based on size: low-rise, mid-rise, and high-rise. One property type is the low-rise, which typically has up to four stories, offers ample parking, and provides limited amenities. Mid-rise, by comparison, may have five to nine levels, usually with an elevator. Think dormitories or elderly housing. These properties offer amenities such as pools, common areas, and gyms.
High-rises are the biggest, most impressive, and most lucrative apartments for investors. These buildings have no size limit and contain multiple units, with at least 13 floors.
They provide ample amenities for residents and are found in metropolitan areas and downtown cities. While extremely expensive, a high rise's luxury units and tenant volume are very attractive to investors. A property management company is a must for these properties.
The terms, condos and apartments, are often used interchangeably, but in fact, they are different. You can own a single housing unit in the entire condo building or you can own multiple units. Apartments are rented by tenants, but condos are owned and then sometimes converted into rental units. Other units in the building will have different owners.
The remainder of a condo building is owned by a so-called condo association. Whether you use your several units as rental properties or own a large share of the entire building, you and the other owners all comprise the condo association. A disparate legal entity, this association meets regularly and determines the allocation of funds, enforcement of rules, and election of office positions.
Common areas such as parking lots, garages, lobbies, and other sections are owned by the condo association.
Overall, there are many possibilities when investing in multifamily properties.
Regardless of the rental income type you choose or the multifamily investment property you have, there are many reasons to seize upon the multifamily real estate market. Make multifamily real estate investing a central part of your real estate investment portfolio today.
Why You NEED to Start Investing in Multifamily Real Estate
You may not realize it, but the benefits of investing in multiple rental units can far outweigh the disadvantages. Many real estate agents know that single-family rentals can be fruitful. The process is usually relatively straightforward.
In the case of large-scale multifamily projects, private investors can provide ample capital in exchange for equity shares.
Pretty simple, right?
Consider the Endless Earning Potential of Multifamily Properties
This is why the multifamily industry can offer better investment opportunities. Sure, the barriers to entry may be steeper and the hard capital requirements may be deeper, but the consistent cash flow, strong appreciation, and portfolio diversification can greatly offset these concerns with time.
Whether you own equity in multiple retail properties, residential multifamily housing, or some other multifamily investment, the financial possibilities are boundless.
Enjoy sustained security, capitalize on appreciation, and generate wealth through a lasting gross monthly income. Just ask a group like QC Capital, which has acquired over $100 million in multifamily units since only 2019.
Here are some of the top reasons you should be investing in multifamily real estate.
The Best Reasons to Adopt a Multifamily Real Estate Investment Strategy
The current economy is tumultuous and the future is unforeseen. If you're at all worried about your financial forecast, wishing to make the most of your money - instead of letting it stagnate in the bank or risking it on the stock market - get into multifamily real estate investing.
Unlock freedom, reduce stress, and maximize your holdings. Whether you're an institutional investor with a high net worth, or simply wish to get in on some private firm action, you owe it to yourself, your loved ones, and your future to seize on high-return, low-risk assets today.
So, ask yourself: what is multifamily investing going to do for you?
Multifamily Investing is a Dependable and Stable Income Source
Many investments have taken a hit since the pandemic and the associated economic conditions. Real estate, however, continues to be a crucial investment because everybody needs shelter. If you invest in a single-family home, you'll be stuck with the mortgage and other expenses when the tenants leave. With multifamily properties, you have multiple revenue streams from multiple tenants.
Why is this important?
Aside from the obvious reason - more money - multiple income streams mitigate investment risk, counteract onerous costs, and compensate for vacancies. Whether you own residential buildings, townhouse rental properties, or some other form of multifamily living space, the financial upside can be lucrative.
The Robust Cash Flow of Multifamily Rental Properties
With time and smart strategy, multifamily owners can profit handsomely from their investments. The gains on some larger multifamily properties can accrue with time, far outpacing gains on larger single-family properties.
Also, consider the size of the cash flows. Multifamily real estate investing can take on the form of towering skyscrapers to low-rise apartment buildings. Due to the ease of scalability, you can quickly acquire multiple properties inside a single building.
Increased scalability also allows you to adeptly diversify your investment portfolio as you venture into related areas of real estate investing.
Scalability Through Joint Multifamily Investors
Highly scalable investment properties might include industrial, commercial and mixed-use assets that co-function alongside your primary multifamily properties.
If these multifaceted projects sound too daunting or unrealistic, consider pooling your resources with other real estate investors. With an increasing presence online, multifamily syndication allows parties from across the country and the world to share in powerful, time-tested real estate investments.
Are you interested in gaining maximum returns on your investment capital? Do you seek a fully passive income from properties that you don't have to operate, manage, develop, and maintain?
If so, consult QC Capital today."
The Irresistible Tax Advantages of Multifamily Properties
Another key reason to invest in a multifamily property is the undeniable tax breaks, benefits, and advantages that come with it. Like all real estate investments, the tax perks of multifamily properties are especially attractive in the current economic climate.
Add in a slow but steady appreciation and your estimated monthly income, and you can really begin to enjoy some wealth accumulation.
The tax benefits of a multifamily investment property are impressive.
Standard Deductions for Multifamily Rental Units
You've probably heard it before, but real estate investors know it best. The taxman can be beaten if you're smart, know what you have at your fingertips, and act accordingly within the law.
With private firms like QC capital, passive investors, especially, can enjoy the benefits of depreciation.
In some cases, any losses stemming from the passive investment may only offset the income from that passive income. In other words, these losses would not offset a passive investor's primary income. Of course, these tax write-offs depend largely on the type and manner of investment.
In many passive investments, investors' capital is used for the acquisition cost of the property. The acquisition cost includes the property's purchase price, as well as any acquisition, legal and transaction fees, monetary reserves, and capital ventures.
Whether it's your first major equity share in your first rental property or one of many in your real estate portfolio, you should always consult with a seasoned investment specialist. Otherwise, you might miss out on crucial deductions.
Recovering Costs through Multifamily Property Depreciation
Essentially, depreciation is the total deductions in the value of a multifamily property. This mechanism is used to account for the decrease in a property's value over time. In other words, the present value must be calculated to account for the degradation of the property (i.e., wear and tear) during its lifetime.
Ultimately, the depreciation of a multifamily property reduces tax liability and helps the investor recover costs on maintenance, improvements, and related expenses. Be mindful that depreciation does not refer to cash flow.
If you have questions about depreciation or calculating your multifamily property value at any time, contact an investment expert.
1031 Exchanges for Multifamily Investing
Another reason multifamily development investing is so alluring to investors is the use of the 1031 exchange. A 1031 exchange operates under the rules of Section 1031 of the Internal Revenue Code. An investor can enjoy deferral of capital gains taxes through this vehicle.
Under a 1031 exchange, a multifamily property is swapped for another like-kind replacement property. Typically, like-kind properties take many forms. They can be all building types, including commercial, residential or industrial. For instance, a multifamily property could be swapped for a factory.
However, the like-kind relinquished property and the replacement property must both be used for business or investment purposes. Vacation properties will usually not qualify.
Overall, a 1031 exchange is a great way to defer capital gains on a multifamily property or multifamily properties in perpetuity. Investing in multifamily properties is also a great way to diversify your real estate investment portfolio reliably and profitably.
Portfolio Diversification Through Multifamily Investment
Whether you're investing in a single-family home, commercial real estate, or some gargantuan industrial property, you always need to ensure your cash flow streams are protected. This is where portfolio diversification becomes critical. Losses on any rental property asset should be offset by gains on another.
Just consider the logistics. With single-family properties, there are no split units. Every single-family property has a distinct own loan structure, inspection requirements, and buyer-seller relationship. As you accumulate holdings in one single-family property after another, you may find yourself buried under paperwork.
Multifamily investment is different.
Why Many Real Estate Investors Prefer Multifamily Properties
The multifamily unit of an apartment complex, for instance, is different. Rather than investing in and managing multiple units, you can hold an equity share of the overall investment.
As a passive investor, you don't have to worry endlessly over financial structures, unit maintenance and management, and other costs typically associated with so-called landlords. You can sit back and leave all the details and heavy lifting to the capital firm handling your investment.
With every new multifamily property investment, you enjoy multiple cash flow streams and growth structures.
This means scalability is significantly easier. The capital firm managing your investment will handle every step. You don't have to deal with a property manager or property management company handling the property. You don't have to spend any time conducting risk analyses, formulating business strategies, or making market comparisons.
A leading investment capital firm like QC capital will ensure every aspect is optimized. From amortization to appreciation, tenant management, leverage strategies, and more, real estate investment groups can handle it all.
With the help of investment specialists, you'll enjoy the many benefits of equity shares in multifamily properties.
Winning Strategies for Multifamily Development Investment in 2022 and Beyond
Before you begin considering multifamily investment properties, you should be sure that you have the financial wherewithal. Although these properties may require more capital than single-family properties, the benefits can more than compensate for them.
As you plan your investment(s), ensure you have a firm grasp of every estimated monthly expense. Your down payment, loan type, credit score, and debt-to-income ratio are all vital factors in determining your investment ability.
Be patient, err on the side of caution, and always consult a leading real estate investment expert to see if you qualify as an accredited or non-accredited investor.
Fully Optimizing Your Multifamily Property Investment in 2022 and Beyond
Overall, it is your duty as a smart multifamily investor to ensure all your ducks are in line. You want to ensure you've aligned with an investment firm that has a history of managing successful assets. Why would you risk your hard-earned capital with groups that can't provide high returns?
You want a firm that can fully maximize your investment capital for consistent and robust cash flow. Passive investment is called passive for a reason.
A leading real estate investment firm will ask several critical questions to acquire and optimize niche-leading assets.
Ask the Right Questions, Get the Right Answers
How stable are prices and the property itself?
Are there appealing demographic statistics?
How accessible are good schools, venues, businesses, and attractions?
How much are you willing to pay and what long-term or short-term plan makes that payment plan viable?
What is the expected income?
What additional income sources can offset expenses and protect your assets?
All of these questions and concerns are vital and should be discussed with your agent and investment advisor.
Calculating Returns on Your Multifamily Investments
At the end of the day, you invest in multifamily units and properties to make money. Whether we like it or not, money is the gateway to many things in life. Money can buy your freedom, it can bring security, safety, and some may argue, happiness.
Regardless of the philosophical perspective, your goal in investing is to increase cash flow and boost your overall returns. You want returns that are reliable, robust, and guaranteed even in times of economic duress. In today's uncertain economy, passive investors want preferred returns more than ever.
The Importance of a Preferred Return in Real Estate
Simply put, preferred returns are the percentage of returns of profits passive investors receive. They are so-called preferred because the investors receive them before investment managers and sponsors receive theirs.
These preferred returns typically account for 6% to 9% of the overall profit return. For equity investors, preferred returns are especially attractive.
Any passive investor seeking strong, predictable cash flows from strong, reliable assets should seek preferred returns.
At QC Capital, investment specialists have helped investors gain high returns from optimized, top-niche assets since 2019. With an acquisition portfolio of 500 multi-family units totaling over $100 million in value, QC Capital gets results that other firms do not.
Preferred and Common Equity for Passive Investors
There are generally two types of equity in passive real estate investments. In addition to preferred equity, common equity investors also receive their 'cut' of the investment. The difference is that common equity investors receive their returns only once the preferred equity investors are paid.
All returns are based on built-in percentages, and both types of investors will receive these percentage profits before investment managers do. As limited partners, passive real estate investors usually enjoy 70% of the profit while 30% goes to general partners.
The simple formula for calculating your preferred return is as follows:
Investor Equity x Preferred Rate = Preferred Return Amount
Of course, these calculations may vary based on accumulations and accruals, and whether or not the return is non-cumulative or cumulative.
Uncertain or unclear? If you have any questions or concerns about any of this, consult a leading investment specialist near you.
Take Your Multifamily Real Estate Investing to The NEXT LEVEL
Whether you're investing in commercial real estate, residential housing, or industrial factories and plants, you want an investment expert you can trust. The best investment minds can help you optimize the entire investment process, handling every step from acquisition to property management and cash flow generation.
Passive multifamily real estate investing is a no-brainer! Why waste time dealing with a property management company, struggling to calculate net operating income, or making minimal money from single-family homes?
Why worry about risk or return analyses, financial underwriting or asset identification and management?
Enjoy a fully passive investment experience today.
With passive multifamily real estate investing, you can enjoy high returns from leading assets guaranteed to deliver reliably, robustly, and for years to come.
What is multifamily investing going to do for you, you ask? With the right experts at your side - a lot!
At QC Capital, our partners and accredited investors can capitalize on highly reliable, highly profitable investments. Through a model of risk mitigation and strategic value creation, our institutional-grade assets routinely deliver investors outsized returns.
If your earned income exceeded $200,000 in each of the past two years, or your net worth is over $1 million, filing singly or jointly, we want to hear from you! Even entities like banks, corporations, and nonprofits can qualify as accredited investors with QC capital.
So, what are you waiting for?
Enjoy robust cash flows, appreciation, multifamily investment opportunities, and tax benefits with relative ease. Align yourself with top experts you can trust. Consult our multifamily investment specialists today, and let's begin wealth creation immediately.