Apply For A LoanSee How InstaLend Can Finance Your Next Investment PropertyLearn More

5 Benefits Of Investing In Multi Family Homes

5 Benefits Of Investing In Multi Family Homes

Are you planning to purchase a property or start your real estate investing journey? If so, you must know about multi family homes. After all, they are incredibly beneficial in numerous ways. In fact, this is why multi family homes are growing increasingly popular over the years. Read on for the five main benefits you can enjoy simply by investing in multi family homes.

What are Multi Family Homes?

Let’s start by defining what multi family homes include. This term applies to any residential property with multiple dwelling units. Multi-family homes can really be any type of property, including an apartment building that has been divided to accommodate more than one family who lives seperately.

Boosted Cash Flow

The stable monthly income that these multi family homes offer is one advantage you can enjoy. With multiple rental options, because it is a multi family home, you can earn more rental money and a boosted cash flow.

Diversified Investment Portfolio

Another great benefit of multi family homes? Well, owning multi family homes allows you to diversify your real estate holdings. Not to mention, you may also increase your income by renting out the entire unit if you decide not to live there.

Increased Tax Benefits

Arguably, one of the reasons why multi family homes are so popular is because of the incredible tax benefits investors can enjoy. The majority of repairs and the interest you pay on your mortgage are deductible as business expenses.

The increased deduction for eligible income under Trump’s Tax Cuts and Jobs Act benefits multifamily property owners and investors. First, depending on the kind of business and income level of the taxpayer, some rental properties may qualify for the 20% deduction for qualifying business income.

At the same time, an extra 15.3% of income may be deducted for self-employment taxes, of which 12.4% goes to Social Security tax and 2.9% to Medicare tax. In fact, you may even qualify for an energy efficiency tax credits in several states.

More Favorable Loan Opportunities

Because the risk is divided across several units, lenders view multifamily homes as safe investments. A single vacancy has less of an influence on monthly income the more units there are.

Additionally, multi family properties often retain their value. This is partly because of the revenue generated by renters. As such, you can expect to enjoy more loan opportunities that can assist you in your journey to investing in multi family homes. Some loans that you can consider include FHA loans, VA loans, conventional loans, and commercial loans.

Increasing Demand for Multi Family Homes

As you may know, when demand for a property increases, it means that you can not only easily sell it off, but you can even earn more profits. And the demand for multi family homes is predicted to grow for the next couple of years. This is a result of a number of things, including how Millennials and Baby Boomer’s rent. In fact, many individuals today choose to rent homes or apartments rather than own them.

  • December 14, 2022
  • 3 min read
About Author