- jerry woods
Multi-family properties are a great investment
In the opinion of BHI Construction & Real Estate Development, real estate is the best way to grow wealth. If you want to get super-rich, get involved in real estate, by building it, owning, or designing it — but not just any real estate, multi-family properties in particular.
Multi-family homes, come in many forms including apartments, condos, duplexes, etc… But the main thing they have in common is that they pay you (the homeowner). It may not be a lot, it may be just enough to cover half of the mortgage, but it’s still something. The best multi-family home investments pay the mortgage as well pay the owner a profit each month.
Multi-family home investments have always done well but are expected to skyrocket over the next decade due to a number of key indicators including;
75 million Baby Boomers are headed into retirement and will be downsizing for large single-family homes because the kids are out of the house. They don’t want to deal with the maintenance of a home or they simply want to travel more.
Many of today's apartment complexes may be converted to retirement communities in the future. That means get in now to be bought out by a larger developer later.
Many millennials aren't buying homes, they are renting.
It's getting more expensive to build new apartment units. The costs of land, permits, and many restrictive community covenants have made it costs prohibitive to build new buildings.
For many homebuyers, it's easier to get a loan on a multi-family unit than any other piece of real estate.
Buying a multi-family building lowers the risk for many lenders. If you have a building with 16 units, even if a couple of units are vacant, you still can make it work; the more units, the better.
Below is an example of how multi-family properties are a great investment:
Let’s say you purchase a 49-unit property priced at $35,000 per unit with an 8% cap (the return on investment based on the income a property is projected to create) for $1,750,000. If you pay cash for this deal at $1,750,000, you would make $140,000 free-cash-flow per year after expenses. If you took out a loan, with a $450,000 down payment and financing of the balance of $1,300,000, the debt payment would be $78,000 per year. This would still make you $62,000 cash flow per year. This cannot be done with a home.
Key Factors for Real Estate investing in multi-family homes:
Most communities cannot keep up with the demand for rental housing.
Rents never go down.
You can leverage the equity in the property to invest in more properties.
Income-producing properties provide excellent appreciation value.
There are tax benefits to be had with multi-family units not available for single-family homes
Contact BHIbuilds.com for more information