Why Invest In Apartments?
Apartments outperform stocks and bonds.
On average, commercial real estate tends to outperform the stock market. Additionally, real estate has higher risk-adjusted returns than the stock market. So, even though housing prices do not grow as quickly as equities, there is a comparatively lower chance of an investor losing their savings in a sudden real estate crash. The stability that comes with the real estate market, enables investors to build generational wealth through strong stable growth over a long period of time.
Multifamily can be an attractive option for investors for several reasons:
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It is a necessity-based asset. To put it simply, residents need a place to live. Additionally, residents experience friction such as time, cost, and effort if they have to move.
It has intrinsic value
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Leases are short enough to adjust with the market
Most leases are no more than 12 months, providing owners / operators to increase rents to account for the annual rate of inflation, which helps to stabilize or even increase cash flow, which also helps to increase the value of the asset.
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Recovers quickly
The value of multifamily assets typically does not drop significantly compared to other assets during challenging market times. Additionally, multifamily tends to recover faster than other investments.
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We are becoming a renter nation.
The Federal Reserve Bank of Atlanta created the National Home Ownership Affordability Monitor (HOAM) to track the ability of the median income family to afford the median-priced home utilizing the standard 30% of income measure. The chart shows that, nationally, we are currently well below the affordability threshold.
For multifamily operators and investors, this is good news. This means that people are more likely to continue renting compared to purchasing their primary residence.
Rising Demand for Apartments
Demand for apartments is at an all time high and still climbing.
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Declining Vacancy
Rental Vacancy Rates across the United States are lower than they have been in the last 20 years due to rising demand. For investors, this means consistent, recurring monthly revenue from tenants, reducing risk.
Take Advantages of the Tax Benefits
Investing in multifamily real estate is not just a pathway to income and capital appreciation; it's a strategic endeavor deeply intertwined with the realm of tax advantages.
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Top strategies we employ on our assets to allow lower taxes for our investors:
Cost Segregation Studies to accelerate depreciation and boost tax savings
We perform cost segregation studies on all of our assets, and the tax benefits pass through to our investors via annual year end reporting on Schedule K-1s that are issued for the preceding year.
Bonus Depreciation
Since we only buy value-add properties, a portion of the eligible improvements we make in the first year are able to be deducted, further increasing tax savings.
Interest Expense & Property Tax Deductions
For some of our assets, we may obtain an interest-only loan for the first 12-24 months. Additionally, annual property tax is also a deductible expense. Both of these deductions effectively lowers our overall tax bill, thereby returning greater profit to our investors.