In a passive multifamily real estate investment, all of the above work still needs to be done; it is just outsourced to someone else. Often, this takes the form of a multifamily investment firm or individual transaction sponsor who specializes in the acquisition and management of multifamily properties. For individual investors, there are a number of important benefits to this approach.
With a passive multifamily real estate investment, all of the below benefits are truly value add to an investor’s financial security and wealth creation. Whereas with an active investor, you not only don’t receive the below-highlighted benefits but rather, have to be “all hands on deck”. Often, investors prefer to passively invest to allow themselves to focus on their primary business/es. And the importance for investors is to ensure they are investing with a best-in-class multifamily investment management firm or individual transaction sponsor who solely specializes in the acquisition and management of multifamily properties.
investors don't need specialized knowledge of assets or tools, just meeting specific income and net worth criteria is sufficient.
Partnering with multifamily firms helps individual investors leverage assets like relationships, software tools, expertise, and time for higher returns in commercial real estate.
Passive investment in multifamily ownership provides income without property management responsibilities, allowing investors to pursue other interests.
Multifamily transaction sponsor investments provide tax benefits: Income and expenses are processed through the LLC, with remaining profits distributed to investors, and capital gains taxes on profitable investments can be deferred with a 1031 exchange.
Multifamily firms attract capital from multiple investors, enabling them to buy premium apartment buildings for steady cash flow. Owning a portion of a top-quality asset can be more advantageous than owning a lower-quality asset outright.
When comparing multifamily real estate investments to stocks or bonds, a key advantage is price stability. Unlike publicly traded markets, many passive multifamily investments are less prone to price fluctuations.
For those who are convinced of the benefits of a passive multifamily investment, there are two common investment vehicles through which this can be accomplished:
REITs offer investors exposure to commercial real estate assets and can be publicly traded on stock exchanges or privately offered to accredited investors. They can also specialize in specific property types.
Multifamily investors can collaborate with a deal syndicator raising capital for a specific rental property. While this option offers less liquidity, investors gain direct insights into the property for conducting their due diligence.
If you would like to inquire more contact us at info@TopazCG.com for more information.
