Who does not love the idea of wealth and freedom that real estate can offer? Often, some investors jump into commercial real estate investing without realizing that some investment strategies do not carry the advantages of others. What they forget is to know why and how owning real estate can make them wealthy better than any other investment strategy.
In this blog, we will answer that very question.
Why focus on multifamily?
Multifamily apartments offer greater control in determining the results of real estate investment. Control, taxes, and debt are some of the powerful elements in real estate. For an average investor, debt is commonly used in real estate and not in private lending and stocks.
How should you use taxes in your favor?
A cost segregation study reclassifies and identifies personal property assets in order to reduce the depreciation time for tax purposes, reducing current income tax obligations. That means the IRS enables you to accelerate depreciation on cabinets, carpets, appliances, light fixtures, and other parts of the building.
It is a good idea to break down all the different parts of the cost segregation along with their depreciation rates.
The power of debt
The major difference between owning investment real estate and other investment classes is the power of debt. Amortization comes with the most debt. Wealth is made in the amortization of the debt (leverage) you put on the real estate property.
Being an investor, you control the revenue you make and the value as well. In other words, if you increase your income either by raising rents or adding any other source of ancillary income, this way, you will add value.
On the flip side, if you reduce your expenses by renegotiating operating expense costs, turnovers, and vacancy, billing residents back for utilities, putting in energy-efficient plumbing fixtures and light bulbs, you will increase the value of the real estate property.
The key takeaway
Like stocks, real estate investments enable investors to become successful through several strategies. Owning a collection of rental properties is one of the popular ways to invest money in real estate properties.
Properties that have only one residential rental unit are known as single-family properties. On the other hand, apartments having multiple rental units are referred to as multifamily properties.
Owning multifamily real estate properties comes with a lot of benefits. A few of them are – access to easier financing opportunities, the luxury of employing a property manager and the ability to grow your portfolio quickly.
Why work with Wealth BCI?
At Wealth BCI, we are a private investment company that helps you acquire, lease, and sell commercial real estate properties to build wealth. We focus on taking a research-driven approach when it comes to asset selection and investing in real estate. We help ensure consistent returns on your investments.
We basically partner real estate investments with investors and help them achieve maximum return on their investments.