The State of Multi-Family Real Estate Investments in 2022

While it’s true that the real estate market takes a hit time and again, the market always bounces back and can recover lost property values within in a few years, if not months. However, as an investor, you can’t tolerate such a substantial risk, even for a few days. In this case, a multi-family real estate is an ideal investment option for you. 

This sector has little risk with increasing demand in the last few years. So, if you want to earn greater profits in less time without facing any trouble, the multi-family properties are the right investment option.

Want to learn more? Here are some reasons to invest in this area of the real estate industry.

Easier to Finance

The cost of purchasing a single-family home is much lower than the investment necessary in a multi-family building, but  getting a loan for a multi-family property is sometimes much easier. 

That’s because a multi-family property can generate a higher cash flow than smaller, single-family homes. In fact, if your tenants make late payments, you can still reap the benefits of multi-family housing. For instance, if a tenant moves out of your single-family house, your propertywill become 100% unoccupied. But in the case of a duplex, one vacancy means that your property is 50% vacant. Hence, investing in a multi-family property will ensure that some revenue will come your way in any case. 

The growth in the multifamily segment benefitted property owners who already had a duplex, triplex, or other types of family housing. Since the property values are appreciating over time, you can take advantage of higher equity.

Quicker Process to Multi-Unit Ownership

Multi-family properties are the perfect option for people who want to grow a bigger portfolio of rental units. Purchasing a 10-unit apartment building takes less time and effort than purchasing10 separate homes in different locations. In the case of the latter, you need to check and investigate ten different houses, meet 10 different property owners, and go through the real estate process 10 separate times. 

What’s more, you might have to take 10 loans to finance your desired properties. So, the entire process takes much more time than you can imagine, preventing you from reaching your goals.

Tax Benefits

Whether you invest in duplexes, triples, or other multi-family homes, you can get a significant tax advantage. Generally, investors opt for a mortgage to finance multi-family real estate. This makes them eligible to get a tax deduction for the mortgage interest they paid. 

Note the deduction is much higher in your first year of ownership as your mortgage starts to amortize. So, these types of properties can depreciate over a period of 27.5 years. It also stays true if your property appreciates over the years. 

Investors can use the depreciation to offset the rent you collect every year. Because of these reasons, multi-family real estate is an ideal asset for every type of investor.

Passive Income

Choosing multi-family properties over others is the right way of generating the most income with the least effort. Wondering how? The property manager who manages the property handles the entire rental process, the operations, and other tasks related to your properties. This allows you to enjoy significant profits without lifting a finger.

The manager will help you get the rent on time, find people to help you rent the house, or solve the problem of your rented properties. 

Millennials Are Opting for Rented Properties

A survey by RentCafe indicates that millennials prefer to rent than buy a house. In fact, the research shows a 20% rise in rental properties in 2021. Plus, most millennials who are earning more than $50,000 are inclined towards rental properties more than ever. Precisely, the share of rental applications of millennials who earn more than $50,000 is up to 36%. 

Since multi-family homes serve as a great place to live for millennials, you can attract a lot of people to your property. This is why it’s easier to fill your vacant property and find new tenants if older tenants move out of the house. Additionally, a CBRE survey shows an expected increase in effective urban rent of 8% in 2022. So, you can get the right tenants for your house in 2022. 

Bottom Line

Ready to invest in profitable multi-family real estate? So, start searching for an ideal propertytoday! In this case, SecondRE can help. On the SecondRE Marketplace, you can find vetted, cash-generating multi-family properties from reputable real estate sponsors and operators.

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