Most single family homeowner would love to receive a check from their tenant every month: Imagine if you have a hundred tenants under one roof sending you hundred checks every month.
Bigger is better, own a multifamily apartment building to create an ultimate source of passive income.
In the past 20 yrs, there has been an incredible demand for apartment buildings due to the changing trend in home ownership. Once upon a time, it was a popular belief that owning a home is a part of the “American Dream” or the “ Best investment of your life”. In 2020, it has proven to be neither.
After the last housing market collapse in 2007-08, more and more people have started renting their houses, especially in the USA and Canada. The rising cost of homeownership, student debt, and lifestyle preferences are key reasons why millennials are opting to rent rather than own. Millennials also tend to value mobility and flexibility over the benefits of owning property, and for this reason they are more likely than previous generations to prefer renting.
According to a Forbes report, between 2009 and 2015, the biggest shift from homeownership to renting came from those aged 55 and older (in other words, boomers). Not because senior people can not afford housing but they prefer to live in apartments because they get hassle-free, amenity-filled luxury living.
Advantages
Owning a right rental property whether a house, an office building, or an apartment building can create a very steady source of passive income. I personally love multi-family real estate more than investing in a single home: it's much better to have multiple tenants under one roof & it's easier to manage by a professional management company. With our primary job, we don’t want to be bothered by tenants for every little need- you want it to be really passive- so you can keep doing what you do the best but also enjoy the passive income every month. Multi-family also has great tax advantages and most of the rental income is tax free. With time, the value of the property goes up.
Multi-family real estate consistently generates a strong cash flow every month. This remains the case even if a property has a handful of vacancies or a couple of tenants who are late with their rent payments. If a tenant, for example, moves out of a single-family home, that property would become 100% vacant.
Multi-family has also proven to be very resilient in the time of economic crisis. People always need a roof over their head and most people during recession or economic crunch cannot afford to own a house. Other advantages to owning multi-family real estate include: access to easier and better financing opportunities, the ability to quickly grow one's rental property portfolio, and the luxury of hiring a property manager.
Disadvantages
There are, however, some disadvantages of owning a multifamily apartments. It's a big investment and most of the time you need a group of investors or friends come together and own this investment property (mostly too many people are involved) and most of the time you hold this kind of property for 5-10 yrs, so your money is locked for that period of time.
The Bottom Line
Real estate investment, wherever in the world you live, has been the single best vehicle for generating serious wealth in the long run. Many people have achieved financial freedom and quit their primary jobs after acquiring a few good real estate properties, especially apartment buildings in the USA and Canada.
The key with any kind of successful investment is to always know how it works, do your due diligence, know who you are investing with, what kind of return you get, and also know what kind of risk it carries because there is no investment in the world which has zero risk. You can mitigate those risks by educating yourself and building your trust worthy network.
“ Your Network is your Net Worth”
-Tim Sanders
There is a reason real estate is the best form of investment because it is “REAL”. Unlike stocks, which you can not see or touch, real estate is tangible: you can see it, feel it, and pass it on to generations.
In my opinion (I may be wrong) but the multi-family investment is by far the safest and most consistent way of generating passive income for a long time.
Multi-family investment gives you three different sources of income:
1- Rental Income
2- Capital Gain or value Appreciation
3- Tax advantages put money back into your pocket.
As we all know, Amazon and the COVID-19 fiasco has brought havoc into so many businesses and industries like malls, theaters, retail shops, mom & pop shops, some franchises, hotels, and office buildings. Apartment buildings have been least affected and still producing cash flow and it will remain very resilient in future. The new post-COVID world will be very different and investors need to be very mindful before putting their hard earned money to work.
I strongly encourage all my readers to look into this kind of investment, educate yourself, know the inside out of the business, and find the right people with some track record who can help you embark on this great vehicle of generating passive income.
I’ll finish with the one of my favorite quote,
“Salary makes you Living, Profit makes you fortune”
- Jim Rohn
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