Investing in real estate is hot right now and for good reason. Amazing opportunities exist across many asset classes of properties, but currently multifamily real estate is proving to be one of the most lucrative investments that you can make in today's economic climate. Here we’re answering the question “Why Invest in Multifamily Real Estate?” in detail.
Why Invest in Multifamily Real Estate?
We’re assuming you agree that real estate alone is a good investment, but the question being asked is “Why Multifamily?”. We’re sharing four distinct reasons that represent the most important aspects of this property type.
- Multifamily has historically performed well during recessionary periods
Housing is a basic need. Everyone must have a place to live, entertain, or raise a family.
It doesn’t matter what happens to the economy. Granted, some may decide to consolidate households (boyfriend and girlfriend move in together, children move back in with parents, etc.), but it is always fairly muted compared to economic effects on other property types. Here at KRI, we like investing in projects that are fairly recession resistant. It just makes sense!
- Investors can earn extraordinary risk adjusted returns
Traditionally, multifamily real estate has been considered a lower risk investment vehicle. Because of that, most people think of multifamily real estate as offering low returns. We have proven that, if you invest with the right partners (like KRI), these relatively lower risk investments can generate extraordinary returns. Historically, KRI investors have enjoyed 20%, 25%, even 30%+ annual returns. We call returns like these extraordinary risk adjusted returns.
- Multifamily price volatility is generally lower than the stock market
This is for a number of reasons. First, the illiquid nature of real estate investments tends to temper emotional selling often seen in the stock market. Second, demand for this asset type is generally much less volatile. Again, this goes back to the fact that everyone needs a place to live. Sure, in recessionary periods there will be some consolidation of demand (kids moving back in with parents, etc.), but the overall effect of these things on demand is usually much less than it is when compared to most businesses or other real estate asset types during recessions.
- You can take advantage of significant tax benefits.
Depreciation – Depreciation is a non-cash expense that reduces income but doesn’t affect the amount of cash the property generates. And, if that wasn’t enough, you even get this depreciation deduction while the property is appreciating in value!
Capital Gains Generally Taxed at a Lower Rate – When you sell the property, the gains you realize will usually be taxed at a lower tax rate than the rate you pay on other “earned” income.
Check with your CPA for even more tax benefits!
Even in a Pandemic, Multifamily Investment Opportunities See Returns
If you look back in history many of the best times to invest were in times of economic change, downturns, and recessions. While we are moving towards the end of the current pandemic, there are still extremely well priced deals! Investors are getting better prices, access to capital with very low interest rates, and a high demand in multifamily real estate from tenants who are looking to move based on market opportunities available to them.
At KRI Partners, we are working with investors just like you making it easy to grow your wealth year after year by investing in high returning multifamily real estate deals.