Virtues of Real Estate

Real Estate has a multitude of advantages, over investing in other asset classes such as stocks, bonds or mutual funds.

Real estate offers

  • predictable cash flow,
  • an effective hedge against inflation,
  • enhanced returns by employing leverage, (where as margins to invest in stocks is not advisable)
  • growth in equity by reducing debt and
  • tax-advantaged ways to exit and/or grow the investments.

Done right, Real Estate can be one of the best investments to make with ones money.

There are multiple strategies of investing in real estate.  A few of them include :

  • Flipping – Buying, fixing and selling the properties, thanks to multiple TV shows and podcasts, is the most popular strategy.
  • Buy and Hold – Buying the properties, sprucing them up and placing a tenant would enable you to accumulate equity while the tenant effectively pays the mortgage and other expenses (thru rent.)
  • Short-Term Rentals – With the onset of platforms such as Airbnb short-term rentals of full properties or partial rentals (renting a room) have caught on. Moreover buying properties in vacation spots to cater to vacation rentals is also a strategy that could work.
  • Joint Ventures – Partnering with other people is a strategy that is effective for smaller commercial properties such as a multi-family property (10 – 50 units), retail strip centers etc.
  • Syndications – Pooling money from multiple people to buy larger commercial properties is another popular way from retail investors to participate in the asset classes that are mostly the domain of institutional investors.
  • REITs – Investments in Real Estate Investment Trusts (REITs) is very similar to investing in stocks. REITs are traded on exchanges and provide most of the benefits of stock investing and real estate investments.
  • Crowdfunding – This is syndications to the masses. With the recent changes to the laws governing capital raises, crowdfunding platforms such RealtyMogul, CrowdStreet etc have mushroomed and provide smaller investors a way to participate in real estate investments.

Why invest in MultiFamily?

Over the 25-year period from 1992 through 2017, multifamily real estate provided the highest average annual total returns (9.75%) of any commercial real estate sector with the second lowest level of volatility (7.75%), according to research cited in a 2018 report by CBRE, the world’s largest commercial real estate investment firm.

Nation of Renters

A recent study from Harvard shows that America is increasingly becoming a “Nation of Renters”, driven by various demographic shifts such as Millennials, across the nation, increasingly prefer to rent vs buy. Baby Boomers are preferring to downsize and enjoy the benefits of low to no maintenance Supply/Demand dynamics of…

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Economies of Scale

Multifamily offers economies of scale in multiple aspects such as physical structures, portfolio growth, operational efficiencies to name a few and reduces the risk that is inherent in single family investing. Physical Structures: Typically each multifamily building will have multiple housing units. For instance, a 100 unit community might be…

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Forced Appreciation & Cash Flow

Value-Add Investing in Multifamily is a great way of creating passive income streams and also capturing the appreciation in equity. Cashflow: Stabilized multifamily assets can generate steady income and the cash-flow, net of operating expenses, gets distributed to investors (mostly quarterly.) Working with CPAs and other advisors, sponsors can structure…

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Professionally Managed

Professional 3rd party management companies manage the day-to-day operations of these properties. Moreover these investments are run as real businesses and are valued financially based on the typical financial statements such as income statement, rent rolls etc. 3rd Party Property Management: 3rd Party property management companies are engaged to manage…

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Tax Benefits & Favorable Financing

Multifamily offers multiple tax advantages such as, depreciation expense, 1031 exchanges, accelerated depreciation using cost segregation etc..several other asset classes such as stocks, funds, etc do not provide. Moreover the sponsors can provide higher returns on the investments by deploying leverage provided by various financing options such as loans from…

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Win-Win-Win

Investing in MultiFamily housing assets creates a ‘Win-Win-Win’ scenario for all the stakeholders involved. Investors: Multifamily housing provides a very stable and conservative investing avenue for investors both in boom and bust cycles of the economy. These investments protect, build and increase investors capital and provide opportunities to create generational…

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