Investing in multifamily real estate has become a go-to choice for investors in the United States in the last decade. One thing is clear: people are now analyzing how their benefits balance their costs, and hence, they are shifting from the volatile stock market to the stable, steady, and reliable real estate sector.
However, the return you can get from multifamily apartment investing depends on many factors.
Our analysis: The first thing to consider is the type of investment property – multifamily homes – you are looking for. It is highly recommended that you target properties that are in areas with stable and good potential for growth. A recent study showed that there are four major indicators that can tell if an area is primed for growth.
The first indicator is the creation of jobs in a given area. This can include the establishment of major multinational companies, the addition of new businesses, start-ups, and small companies, and the addition of new retail establishments. The second determinant is an increase in population. Population growth drives the demand for housing. The third indicator is an increase in the construction of multifamily homes and related infrastructure. The more amenities in a neighborhood, the more people are attracted to that location. The final indicator is increased spending by residents. A higher consumption rate means you can get higher rents.
Despite the studies and research on comprehending the profitability and success rate of investing in multifamily real estate, there are still many misconceptions regarding multifamily properties. However, multifamily investment courses can help clear all misconceptions and false notions regarding these properties and give you an honest picture of everything that entails in multifamily investments.
Many myths surrounding the viability of multifamily housing as an investment are thrown into the mix of potential investors. Some of these myths and misconceptions are listed below:
Misconception #1: Real Estate is a Dead Investment
Reality: The idea of investing in real estate is not a new concept. In fact, it has been around for a very long time – centuries even. Many of the nations and wealthiest individuals in the world invest in real estate as a method of growing their wealth. Real estate is a very safe investment, especially if you know how to make money in real estate and invest in multifamily housing. You are doing something smart and benefiting from a great rate of return on your investment. You just have to keep in mind that not all multifamily properties have an equal success rate – you need to choose your target location carefully.
Misconception #2: Multifamily Housing is Only for the Rich
Reality: This misconception is probably the most common out there; some people don’t even consider it an urban misconception simply because it is widely held by all socioeconomic demographics. This is completely untrue – there are varying levels of multifamily homes and pricing policies. Multifamily real estate is for anyone. If you read the Multifamily Mindset Reviews, you will see how many people have been able to secure financing and invest in these highly profitable properties easily.
Misconception #3: It is Bad/Expensive to Own a Multifamily Property as a Limited Partnership.
Reality: This myth is perpetuated by people who have never owned a multifamily partnership or been involved in the multifamily industry. In order to purchase a multifamily property, a check must be written by the partnership and cashed by the seller. The check will have to be cashed regardless of whether the investment is held by a partnership or an individual.
Misconception #4: Multifamily Properties are Worthless because they are Impossible to Sell
Reality: There is a perception that multifamily properties are not valuable because they are difficult to sell. This is only partially true. If a property has a unique location, a limited number of units, or any other unique features, then it can be sold in a relatively short period of time.
Misconception #5: Multifamily Housing is a Capital-Intensive Investment
Reality: Multifamily homes are far less capital-intensive than single-family real estate. Multifamily requires fewer dollars to purchase, analyze and manage. In addition, a typical multifamily property will generate positive cash flow in less than a year. In a nutshell, this means that after you purchase the property, you will receive more money than what it costs you to purchase it.
Misconception #6: Multifamily Properties are very Difficult to Manage
Reality: It is true that there are a few extra steps involved in the management of multifamily properties. However, in actuality, managing an apartment complex is not as difficult as it would seem. An apartment building can be just as easy to manage as a single-family house. Investing in multifamily real estate generates enough revenue that you can easily hire a professional property manager to take care of all boring managerial tasks for you. Good business practices can be put into place by following the advice of experienced property managers to ensure that the tenant-landlord relationship and maintenance are handled properly.
Misconception #7: There is a lot of Regulation and Bureaucracy for Multifamily Investment
Reality: While there may be some level of regulation, it does not make the investment more difficult. Some regulations that may affect a multifamily development include – but are not limited to – water and sewer assessments, fire codes, and covenants that have been diligently agreed upon by all property owners within the development’s boundaries.
There is a long history of stories about how someone bought some potential property, financed their purchase through their local bank, and lost their shirt on the deal. The truth is that multifamily real estate investment can be a very profitable undertaking when approached and executed properly.
Multifamily apartment investing is all about deliberations and conscious decision-making. Investors ought to take into consideration the determinants of a successful multifamily investment, such as the location of the property, Net Operating Income, cost of repair and maintenance, and such. You can listen to the Multifamily Podcast to learn more about investing in multifamily real estate and how you can turn it into a prosperous venture.
