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Why Invest In Multifamily Income Property?
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If you are reading this page, you are considering or at the very least, interested in real estate ownership. Now, all you need to know is why invest in multifamily income property in Los Angeles.
Why Invest at all?
To actually build any great deal of wealth, you will need to make your money work for you. Leaders in real estate tell me time and time again that the only way to make great wealth over time is through investments. The government will always tax our earnings but through 1031 exchanges of real property, deference of those taxes is possible long enough to build large portfolios of ownership.
Interested in learning from professionals? Read this month's Interview With A Principal for more tips about ownership.
Why Multifamily?
Cash Flow
Multifamily properties make money in two ways. The first, which everyone knows about, is in appreciation in value. The second, and more often overlooked way to make money with Multifamily, is cash flow and the efficiency of income vs. expenses. Most Multifamily apartment buildings will cash flow enough to pay the mortgage and expenses and have some amount of cash return with 35% down payment. That cash return will rise as units turn over and higher market rents and realized. The effect of this is huge.
If a building is purchased for 10 times the gross rent when the gross rent equals $100,000, that building would be $1,000,000. If, in a few years time, the building's gross rent is $140,000 and sells for 10 times gross, the value of the building is now $1,400,000.
Low Risk
Multifamily apartments are low risk for the basic premise that people will always need a place to sleep. If a unit is not renting, lower the price and see how many tenants apply. The same is not true for other types of real estate where the property does not cure a basic necessity.
Want to find out what units are renting for in the area where you own your investment? Then simply fill out a Market Study Request Form.
Tax Advantages
Did you know that you can write off capital expenses and interest payments on your loan against you annual income? Right now borrowing money is cheap compared to years ago. Active income or the money you get paid at your job is also taxed at a higher rate than Passive income or the money you may off your investments. To find out what Interest Rates are available today, visit our Rates & Financing section.
1031 Exchanges
By far the biggest advantage to owning real estate is using the 1031 Tax Deferred Exchange to build wealth. This section of the Tax code says that you can sell your investment property and buy another property without paying taxes on the your gain. The tax is deferred indefinitely until you sell and take the cash. There are rules to completing a 1031 exchange successfully so, contact us if you are interested.
If you would like more information, need help or want to ask our professional advice, fill out the Ask A Question form and press submit. There is no obligation and we will get back to you as soon as possible.
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