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 these distributions in a tax-advantaged manner. Most of these stabilized properties, typically, generate consistent high single-digit returns.

Forced Appreciation: Apartments, unlike single family homes, are valuated based on the Net Operating Income (NOI) they generate and not based on comparable sales (comps). Sponsors, by infusing additional capital, upgrade the properties which in turn generate greater rental income.They also engage 3rd party property management companies to efficiently manage the operations and control the expenses of these assets. Thus by increasing the income and reducing the expenses the NOI is increased which increases the valuation of these assets.