Volatile swings in the stock market have disillusioned many investors. Real estate investing is an alternative to the stock and bond markets. Multifamily real estate investing focuses on buying investments involving multiple units.
The most common form of multifamily real estate is an apartment building. These may range in number of units in a single building or a complex of several buildings. Any building that has units that are rented individually could be classified as multifamily. This would include a duplex, triplex, and quadplex.
Real estate has several benefits that aren’t available to equity investors. These benefits can be substantial. Tax benefits, including depreciation and capital gains transfers, leverage, appreciation, and self-directed operation.
Multifamily real estate investors typically focus on cash flow. Real estate can provide significant capital appreciation in certain markets, but the typical return is equal to the rate of inflation. Rising prices typically don’t adversely affect real estate. Therefore, many refer to real estate as an inflation hedge.
A secular trend in the United States is the decrease in home ownership. More people are renting rather than buying a home. This has increased rental demands and has made multifamily real estate investing more attractive, regardless of size or complexity of a portfolio.
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