Why Invest in Multi-family Real Estate?
A great question. Why invest in multi-family real estate indeed? If you can’t answer it, you probably shouldn’t invest in it. Of course, that is true of any asset. You need at least a basic understanding of what the asset is and how it makes money. After all, isn’t that why you want to invest? To make money?
Let’s start with the simple question of, why real estate? First, we know there are many paths to growing your wealth, from investing in the stocks to writing a bestselling book to collecting bitcoin.
So, why invest in multi-family real estate?
That’s a great question. When Teri and I started looking for options, the ones that we knew were stocks, bonds, annuities, savings accounts and CDs. Eventually, we learned about Real Estate. With the volatility of the stock market and interest rates being close to zero, we were looking for other investment vehicles. We got interested in Real Estate investing after reading Robert Kiyosaki’s book, Rich Dad, Poor Dad. We started learning, joining local Real Estate Investing (REI) groups, listening to podcast like Old Dawg’s REI Network. Educate yourself to what is possible. We invested passively in our first multi-family in 2013 and never looked back. Stay tuned to the blog for stories about our journey and some of the bumps as well as the highlights. Let’s continue learning about why invest in multifamily real estate.
As we each invested in the stock market and dabbled in a little crypto, we had already given up on savings accounts and CDs, we realized that our Real Estate holdings were performing more consistently than our other investments. Yes, there times the stock market was great, but it also had some big drops. 2008 anyone? COVID? It also didn’t hurt when we heard over 90% of the world’s millionaires were created by investing in real estate, and we were starting to find out why.
The wealthy don’t work for money, their money works for them!
Real Estate Stands out!
Real estate stands out from other types of investments because of several key reasons.
- Produces Cash Flow
- Inflation Resistance
- Uses Leverage
- Gives You Equity
- Can Appreciate In Value
- Better Returns than Stocks
- Provides Tax Benefits
Cash flow is king and real estate investing the means!
Bill Mannassaro
Produces Cash Flow
Real estate syndications provide monthly or quarterly distributions which you will receive directly to your bank account. Cash flow will allow you to live a life by design NOW VS. waiting until you retire so you can use your 401K. Investing in a real estate syndication allows you to make an investment once in the beginning, and then sit back and watch it grow. You are essentially collecting ‘mail box money’ on a hands off investment while experienced operators manage the asset.
Inflation Resistant
When the price of everything goes up real estate will typically follow.
Uses Leverage
Real estate syndications, on average, offer higher returns than other investments by using leverage. We typically look for opportunities where we can provide our investors at least a 8% cash on cash return, at least 70% return, and at least a 15% IRR.
Gives You Equity
You own physical real estate or at least a piece of it.
Can Appreciate in Value
One of the key aspects that helps make real estate inflation resistant! The great thing about commercial real estate is forced appreciation. The higher your Net Operating Income (NOI), the higher the value of the property.
Better Returns than Stocks
Check out this great article from the Financial Samurai.
Provides Tax Benefits
Hello depreciation! This is HUGE! Investing in real estate can often help lower the amount of taxes you owe, even while you’re making great returns on your investment. Obviously we are not CPAs, so you check with your own CPA regarding your unique tax situation.
Over the years Real Estate has been good to us. More on that in future articles, but don’t just take our word for it. Check out what Investopedia has to say. Find other sources like Bigger Pockets and what they say about risk versus reward. Get to know people in the industry.
Schedule a call to chat with us. We would love to get know you. And if you do decide to invest with us, the SEC requires us to have an existing relationship.
Shawn & Teri Griffith
shawn (at) twt-investments (dot) com