With interest rates on the rise and single-family housing demand on the decline, more people than ever before are looking for comfortable rentals. As such, multifamily properties have quickly become one of the most profitable endeavors for real estate investors. If you are an investor interested in a new apartment building, the following information can help you improve your overall profitability.
Three Reasons to Invest in a Multifamily Property Today
If you’re on the fence about buying a multifamily property, there are three exceptionally good reasons to make the jump right away.
- Short-term cash flow. The short-term cash flow potential from multifamily properties is increasing, and it is expected to continue increasing well into the future.
- Long-term appreciation. Multifamily properties – and especially apartment buildings – are expected to drastically appreciate in the coming years as rental housing demand grows.
- Federal & local tax benefits. Multifamily properties are not taxed under the same structure as a single-family home, which means you can collect more rent from more tenants while paying significantly less in taxes.
Rents are on the Rise
Because the demand for rental housing has skyrocketed in the last several months, the supply has grown quite strained. As a result, rents have increased sharply in metropolitan areas in the last year, with experts touting an average increase of roughly 40%. There’s an especially great need for affordable housing in these locations, and affordable rent often translates into long-lived tenancy. However, the luxury rental market is also on fire, and many investors have found that a good mix of the two provides diversification in their portfolios as well as steady income.
Fix-and-Flip or Fix-and-Hold?
Just a couple of short years ago, many investors purchased dilapidated apartments, spent hundreds of thousands of dollars renovating them, and then sold them for a significant profit. Profit margins for these sorts of projects have declined, but there is still profitability there due to the demand for multifamily properties among investors. Some investors have chosen a “fix-and-hold” strategy in which they complete the renovations then fill the units with tenants with the plan to sell the property (and the leases attached to it) at some point in the future. Either of these approaches can be profitable depending on the local area’s housing demand and property values.
United Lending LLC specializes in providing real estate investors with multifamily property and mixed-use property loans that fit their individual needs. Whether you need short-term lending to cover costs until the sale of a property or you’re looking to purchase and manage an apartment complex, we can help you achieve your goals.