Multi family investing is a great way to plan for your retirement and to invest in an asset that, historically, has gone up over time. While there are always ebbs and flows in the real estate market, just as there are in any mother market, land is a tangible asset and you will always have something of worth when you invest in a multi-family apartment building. Not only will your investment appreciate in value over a long enough period of time, but you will also enjoy income every month as you collect rent from your renters.
Benefits of Multi-Family Investing
In 2011, many Americans are in a fragile financial state caused by the collapse of both the stock market and the real estate market. These two things combined have led to a tight credit market, making it very difficult for many people to qualify for a mortgage. When more people are unable to buy their homes, there will be a greater demand for rentals. In fact, even in areas where the real estate market is the most depressed, the rental market is tightening and rents are on the rise. Owning a multi family rental property, therefore, can be a great option as you provide a place to live for people who need homes and you benefit from a good rental market.
When you invest in a rental home, you also get to make money in two different ways. The first potential way to make money is when your apartment building rises in value because land and property becomes more expensive in the area where you live. When you make money in this way, there are even special tax advantages when you want to sell the property. You can, for instance, do something called a 1031-exchange and, as long as you invest the proceeds into another rental property, you can defer payment on the taxes from gains made on the property. Many people use this technique to buy ever-larger apartment complexes, providing them with increased rental income.
Being a Landlord
The important thing to remember about investing in multi-family housing is that you must be prepared for the responsibilities of being a landlord. This means being prepared to:
* handle repairs
* collect rents
* find renters.
Fortunately, if you do not have the time or ability to handle these issues yourself, there are many property management agencies that will handle them for you. In a multi-family rental, you can also choose to have an onsite manager living in one of the apartments. You can pay this person, in part, by offering reduced rent or free rent in exchange for managing the day-to-day operations of the property.
If you are prepared to deal with the responsibilities of being a landlord, investing in multi-family properties is a great choice. You should, however, make sure you seek expert advice on determining what your operating costs will be and how to ensure that the rental property that you buy will generate enough income to cover these costs and hopefully provide a bit of profit left over at the end.