How to Profit from Inflation: Invest in Multifamily Real Estate

If you are looking to invest in real estate, there are many different types of property to consider. One of those which is particularly popular among successful investors right now is multifamily real estate.



One of the main reasons why investing in multifamily property right now is because we are in a time of unprecedently high inflation. High inflation reduces the value owed in the future. Not only that, but as mortgage rates rise during period of inflation, it can be harder for renters to get onto the property ladder, leaving them continuing to rent. This increase in demand often results in increased rental rates, meaning that landlords can expect to see a boost in the return on their investment. 



What is multifamily real estate?


Multifamily real estate is a classification of housing where multiple separate housing units for residential inhabitants are contained within one building. Good examples include:



  • apartment complexes with self-contained living units
  • duplexes, where one family live on each floor
  • townhouses, where two families live in one house separated by an interior wall



Some investors may choose to live in one of the dwellings, in which case it becomes known as an owner-occupied property.



What are the benefits of investing in multifamily real estate?


There are a range of reasons why investors choose to put their money into multifamily real estate with the expectation of a good rate of return.



Larger tenant pool


Unsurprisingly, one of the biggest benefits of choosing to invest in a multifamily property is that having more individual units means you can appeal to a much larger pool of tenants. Why have just one tenant when you could have several? It makes financial sense to have as many tenants as possible as it gives you the opportunity to see a return much more quickly.



Greater income


The numbers speak for themselves. The more tenants you have, the more money you can earn on your investment. Sure, you could rent out a single larger property for a higher amount than a 1-bed condo, but how many larger properties can you actually afford to buy for investment? The rental cost of a larger property is rarely double or triple what you could get from a 1-bed, meaning that it is more effective to invest in multi-family real estate rather than single family dwellings.



Less risk


The trouble with single family units is that if your tenant vacates and you don’t fill the property right away, you’ll be left with no income. However, in a multifamily property, even if one tenant leaves, you will still have the income from the other units to help support your cash flow.



Scale your investment portfolio


If you are looking to expand your investment portfolio, investing in multifamily real estate is a fast way to scale up than acquiring single-family rentals, which you may only be able to afford to buy one at a time.



Tax benefits


No investor wants to pay more tax than they absolutely have to. There are many tax benefits associated with owning a multifamily investment property. These include being able to write off the interest you pay on your mortgage, as well as most any repairs that are needed. In the long term, you can also take advantage of real estate depreciation and cost-segregation tax benefits as your building and its appliances age.



For more information on how to profit from inflation by purchasing multi-family real estate, please don’t hesitate to contact Calturas Capital at (925) 744-7400 today.

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