What if you could get a 10% return on your money while retiring early? Multifamily real estate is an investment strategy that can make this happen.
Investing in multifamily properties is an outstanding way to retire early with real estate. Multifamily properties are especially good for retirees because they offer more opportunities for tax deductions than single-family homes do. In addition, retirees can use their rental income from multifamily properties as part of their qualified retirement plan (such as IRA).
How to get started with Multifamily Investing?
Multi-family real estate investment is a great way to make money and create an income stream in retirement. It is one of the most stable investments you can make, and it is quite simple. Here are some steps to take:
- Find a good property manager: You will need someone whose job it is to manage your properties for you. This person should have experience managing properties like yours, and they should be able to provide references from past clients. You don’t want someone who’s just starting out in the business; this could lead to problems down the road if they don’t know what they’re doing or make mistakes on your behalf.
- Do your research: Look at comparable properties in your area that are currently being rented out by other investors so you can get an idea of how much rent is being charged in your market right now and what kind of amenities are available for tenants at different price points (elevator vs stairs, washer/dryer hookups etc). Then look at local vacancy rates and average rents per square foot for similar units nearby before deciding on how much rent you’ll charge per unit.
- Find an experienced investor: Who can help you get started. There are several ways that you can find an experienced investor in your local area who can help guide you through the process of getting started with real estate investments.
- Get financing: In place before you buy the property so that you don’t need to worry about this later on down the road when your tenants move in and start paying rent! Your bank will have all kinds of options available for financing multi-family properties since these types of deals are relatively common among banks today.
Advantages of Multifamily Investing
Multifamily property investments offer many advantages over other investment types, including:
- Tax advantages. You can deduct the cost of operating a multifamily property from your income taxes. You can also depreciate the value of the property over time, which means you’re not paying taxes on the entire value at once. These tax breaks can add up over time, especially if you invest in high-value properties.
- Flexibility. When you rent out a single-family home, it’s difficult to move into another space without selling or renting out the first one first. Multifamily real estate offers more flexibility because you could move into one unit and pay for another unit as an investment property instead of selling off your existing home and buying another one outright with cash right away.
- Cash flow. Multifamily real estate provides consistent monthly cash flow that helps pay down debt or fund retirement savings accounts such as IRAs or 401(k)s over time — especially if you buy high-value properties that appreciate in value over time with proper management and maintenance practices implemented by professional property managers who oversee each property on behalf of their clients
- Diversification of risk. Putting all of your money into one property is risky because if something happens to that property, you could lose everything. With multifamily properties, however, an investor can spread out his or her money among several different properties and reduce the risk associated with any one particular asset class or market segment.
The benefits of investing in real estate are numerous, and multifamily real estate investment can play a key role in your retirement strategy. Whether you decide to buy low, renovate, and sell high or simply collect the income from your tenants, multifamily real estate offers a unique opportunity for those who are looking to accelerate their path for retirement.
New to multifamily investments? Download this free guide to learn more about multifamily real estate syndications and how to use them to accelerate your retirement, create generational wealth and enjoy tax breaks