03 Apr Why Multifamily Rentals Are an Excellent Hedge Against Inflation
By MW Real Estate Group
LOS ANGELES, CA. – Are you planning on investing in multifamily rental properties in 2018?
There are a number of reasons why multi-family properties are an excellent hedge against inflation including the following:
Lease Turn Over
Retail stores, as well as office buildings normally, have only just a very small number of occupants secured into long-term leases.
Multifamily residences, on the flip side, may have a variety of diversely structured lease arrangements, turning over on a rolling basis.
This really is the source for programmatic value-engineering of NOI (net operational profit). Multifamily investors who involve themselves in active managing benefit from downside-protection by decreasing vacancy direct exposure throughout market downturns.
Turnover of leases in a multifamily property makes it possible for management to smoothly strengthen average rents in keeping with existing market rates, not to mention commensurate with charges of inflation.
Excellent Cash Flow
Multifamily investment gives you larger cashflow as well as decreases investor uncertainty mainly because you enjoy a number of renters having to pay monthly rent, comparatively to choosing individual family assets where you are relying on just one check.
This increased cash flow also makes it possible for you to hire a property management company and pay other expenses associated with owning a multifamily asset.
With a multi-family rental property, you are in reality buying a type of annuity that will pay you a set, or fixed passive cash flow that you can use to pay your other expenses.
Easy to Finance
Since multifamily rental properties offer more revenue for investors than single-family homes, they are also the preferred rental property of choice for most lenders as well as government agencies in the United States.
Besides being easier to finance than a single-family rental property, some loans available to multi-family investors these days are fully non-recourse. This means that a multifamily investor is not personally guaranteeing the loan.
A Non-recourse loan is an excellent way for an investor to increase return on a leveraged investment while they limit their personal risk that they are willing to commit to a specific project.
Stability
Over the years, apartment complexes and other multi-family rental properties in the United States have continued to be one of the most stable investments.
Why? The answer is simple. With property values continuing to increase in Southern California and across the USA, many renters are unable to afford to buy homes and often turn to multi-family rentals before searching for single-family rental properties.
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