2 years ago
2 years ago
Low rates on commercial loans are just one factor drawing investors to multifamily.
Many investors think that starting small is starting smart.
That’s understandable. The idea of acquiring one single-family unit at a time is something that’s comfortable to wrap your arms around. But is it the best use of your money, and more importantly, your time?
Just because it’s easier doesn’t mean it’s worthwhile. You can buy a rental house online with a click of a button — and poof! — you’re a real estate investor. But is this going to get you any closer to creating true wealth for you and your family?
Think about that for a moment.
Just like any other investment strategy, you must understand the fundamentals to be successful. The beauty of multifamily is that it’s common sense investing. Let’s look at some of the benefits of owning an apartment building.
1. Strength of the Market
As an inherent means of survival, multifamily stays steady and doesn’t experience the dramatic changes that retail and office often experience. Multifamily is the least risky real estate asset class, and all demographic indicators suggest it will be a strong market for years to come.
2. Equity Accumulation
Multiple tenants pay down your mortgage. With fewer deals, you can amass a sizeable portfolio of assets for legacy planning in far less time.
Today’s low-cost debt won’t last forever. The cost of capital has never been more attractive, and there is diverse set of multifamily loan products to choose from. Now is the time to lock in long term debt and pay down significant principal over time.
4. Cash Flow
Stock portfolios do not create cash flow unless the stock pays dividends. Apartments traditionally have more stability than stocks.
5. Hard Asset
An apartment building is not a paper asset — you can kick it or kiss it, if you like. If you buy the deal right, its value can never go to zero. Apartments are universally considered an excellent inflation hedge (one day, inflation will eventually kick in).
This post was produced in conjunction with Elite Apartment Coaching. Founded by Christopher Urso, Elite Apartment Coaching helps private real estate investors explode their net worth while protecting their nest egg. Urso is also the founder of URS Capital Partners, a real estate investment company that controls over $70 million worth of apartments throughout the U.S.
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