When it comes to real estate investments, there are times where investors are unsure if they are ready to take on the challenge of owning a multifamily property. Although the management and costs of these properties may seem daunting, there are numerous benefits of buying and owning multifamily properties.

Passive Income

One of the most important benefits of owning a multifamily property that investors will want to hear about is the passive income that comes with owning one. The potential for financial growth is what lures a lot of investors to the real estate investment space, and one of the quickest ways to do that is by owning a multifamily property that is completely rented out. With these tenants providing you with that passive income, making money just became that much easier. Granted there will be a bigger expense up front when it comes to securing the property, but with the right loan from the right lender the most complicated part of the process can become hassle-free.

With lenders such as RCN Capital offering up to 75 percent of the as-is value at purchase as well as offering short-term and long-term loan options depending on the needs of the property, more and more investors are qualifying for multifamily loans. Once the purchase of the property is out of the way, as an investor you can focus on finding the tenants, charging the right amount per tenant based on market rent and be on your way to making that passive income. The key to long-term wealth and success in this industry centers around how much money you can make off your property while putting in as little time, money and energy into it as possible. That is easily the most appealing part of owning a multifamily property.

Property Management

At first, this next benefit may seem like it is a hindrance to passive income but hiring a property manager for your multifamily property is a great way to delegate responsibility. Yes, it will cost money to hire the right property manager, but the time and energy you save because someone else is working for you can make you a much better real estate investor. Multifamily property maintenance is no small task but hiring someone who will handle the day-to-day responsibilities of dealing with tenants and taking care of property maintenance, you can be on the phone with your broker or lender trying to finance your next deal.

If you want to cut costs and lean towards not wanting to hire a property manager, you can run the risk of being stuck in neutral with your real estate investments. You can spend an entire day or even weeks dealing with tenant-related issues or necessary property maintenance and that can eat into your time of being an investor. Finding the right property manager is essential in the multifamily property space.

Tax Advantages

Additionally, if you are worried about the money you will spend on a property management service, you can make that money back and then some with tax write-offs on a multifamily investment property. Some of the expenses that come with owning a multifamily property that you will be able to write off include the following: insurance premiums, management costs, maintenance and repair expenses, marketing costs, utilities offered in each of the units and the interest on your mortgage. All of these subtle and obvious ways to recoup some of your money when its tax season are very attractive to savvy real estate investors.

Speaking of savvy, the passive income tax benefit is another common way that real estate investors can save some money and use it towards their next investment property. If you spend less than 500 hours a year on your real estate investment business, then you can’t qualify as a real estate professional. As a result, your taxes are much lower when you are not classified as a “professional” in the industry.

The last tax benefit, and one of the most important, is the real estate depreciation tax. This can be a revelation for real estate investors and is an important concept for investors to know about and take advantage of. This is the concept that revolves around your property depreciating in value year over year. However, although this depreciation tax considers your property losing value over time, with regular maintenance and some minor renovations, your property is in fact likely to increase in value. Whether the property is making profits or increasing in value, real estate investors are allowed to deduct a depreciation expense from their real estate income tax. It seems too good to be true, but this tax break is an extreme benefit of real estate investment property ownership. This is crucial for multifamily property owners because the bigger and more expensive the property is, the higher the depreciation tax break will be and thus the owner of the property can save thousands of dollars when tax season comes around.

Portfolio Expansion

Another benefit of owning a multifamily property that cannot be overlooked by investors is the scalability of this strategy. Once you have successfully financed one multifamily property the formula to duplicate it is straightforward. Lenders will be more willing to work with you to finance a deal once they know you have multifamily property experience. As an investor you will be more confident and may even consider your next multifamily property having more units than your first, potentially resulting in more income from the properties. Finding market rent and charging your tenants fair value to fill up your units will be much easier as well. Instead of buying countless single-family rentals to try and build up your portfolio, only a few multifamily properties can increase the value of your portfolio drastically based on the number of units.

When you break it down based on how long it will take to finance and own ten single-family properties as opposed to buying two 10-unit multifamily properties, the potential for growth happens much faster and can be exponential.

Even though multifamily properties are obviously larger and more expensive, the benefits of owning one can negate all of that. Reach out to RCN Capital if you have any questions regarding whether a multifamily property is the right investment for you. It’s important to remember the benefits can be crucial to your success and exponentially grow your business, portfolio, and depth of knowledge in the real estate industry. Check back for more real estate expertise and tips with RCN Capital next month!


Nate Zielinski, Junior Business Development Coordinator, joined RCN Capital in 2020. He adds his ambition, communication skills, teamwork, and public speaking ability to RCN’s Business Development team. Nate’s goal will be to recruit new, long-lasting business relationships with brokers and borrowers as well as maintain the strong relationships RCN Capital already has in place. Nate’s prior work experience includes sales, advertisement, copywriting, and social media. Nate graduated from the University of Connecticut in 2015 with a Journalism degree.


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