Real estate is a great investment in general. It’s reliable, stable and consistent. However, one of the best investments you can make within real estate is multifamily real estate. Below are three reasons why you should be investing into multifamily real estate and why it’s the number one investment to invest capital.
Benefit # 1
The first benefit to investing into multifamily real estate is the depreciation. What’s nice about multifamily real estate is when you invest into an asset, you’re going to have depreciation and write-offs when you purchase a property. Then you can get granular and dig into it more. Meaning, you’re going to get a K1 if you own the property. That’s going to lead to a ton of benefits. Furthermore, you’re going to have a ton of write-offs. The nice thing about depreciation is, if you buy a ton of properties, you can write-off a lot of money which will help you pay very little to hardly any tax with your income tax.
This is one of the biggest benefits of owning real estate. There’s a ton of things you can consult with your accountant on that can help you lower the amount of taxes that you pay each year.
Benefit # 2
The next benefit to multifamily real estate is the rents. You’re going to have a lot of appreciation of rents at your property if you pick a really good location. Let’s say you pick an A location and you want to increase the rents by $30/unit every single year. If you have ten units, for example, the rents are $1,000 a month, and you’re going to raise them to $1,030, you’re going to have about $3,600 per year of a cash flow increase. That’s huge. It’s going to increase the value of the property and you’re going to put more in your pocket. Control your expenses so they don’t increase year over year substantially. You’re going to generate a lot of profit from raising the rents and increasing the value of your property. That’s the second benefit to owning multi family real estate.
Benefit # 3
The third benefit is when you invest into real estate and generate income from it, it’s passive income. You’re not going to be taxed the same as if you were working at a job. At a job, if you have an employer and you have a paycheck, you’re going to generate earned income. If you have earned income, you’re going to be taxed at a different rate. If you have passive income you’re generating from a real estate property, then you’re going to pay a completely different tax rate. That’s why it’s so important to take your earned income from your paycheck and save as much as possible to put into passive income assets such as multifamily real estate, which would be apartments and townhouses.
These types of investments are going to multiply your money. If you just save your money from your paycheck and you don’t do anything with it, then it’s going to become less and less valuable every single day. The value of money is always going down, so you have to get it into an asset such as real estate so that it continues to grow and you can preserve your money.
Do you want to learn more about investing into real estate? Check out the rest of our blog!
