How Multifamily Real Estate Can Help You Achieve Financial Freedom

I want to make it abundantly clear: multifamily real estate is not the only exit strategy that will help you achieve financial freedom. It’s worth noting, however, that it’s entirely possible for multifamily real estate to constitute your entire investment portfolio. While it’s not your only option, it can essentially be the only one you need. There’s no reason your whole career as a real estate investor can’t revolve around multifamily properties, as they offer a great foundation to build upon and the opportunity to capitalize on passive income in the latter years of a respective career.

If you are looking to achieve financial freedom, or at least throw the idea of living paycheck to paycheck out the window, you could do far worse than investing in multifamily real estate. In fact, it’s my professional opinion that multifamily real estate investing is not only a great first step in the road to financial freedom, but also a viable investment strategy for the duration of your career.

Why Multifamily Real Estate?

Multifamily real estate is capable of serving as the catalyst of your investing career. And for what it’s worth, there isn’t one, single reason I love the idea of using multifamily real estate to achieve financial freedom, but rather many:

Ability To Finance

More often than not, multifamily properties will coincide with a larger price tag than their single-family counterparts, and for good reason: they are unequivocally bigger in just about every way. According to Zillow, one of the country’s most popular home valuation sites, “the median home value in the United States is $200,700,” and that price point is up 6.8 percent from the previous year. Despite the spike in housing prices we have seen in recent years, the value of single-family homes pale in comparison to those of multifamily properties.

Interestingly enough, the higher price of multifamily properties doesn’t condemn them to impossible lending practices. In fact, multifamily properties are actually more likely to be approved by a bank for a loan than the average home for one simple reason: they are much more likely to generate cash flow each and every month.

Don’t let their size fool you; multifamily properties are actually easier to finance than single-family homes.

Speed Of Implementation

It stands to reason that the average real estate portfolio isn’t created overnight. In fact, today’s most prolific real estate portfolios are the direct result of years and years of hard work. You won’t find one successful portfolio full of real estate assets that was built in a day, but I digress. Simply because today’s best portfolios are the result of time, doesn’t mean they need to take forever. And therein lies one of the best benefits of multifamily real estate: it can facilitate the growth of a portfolio in both a timely and profitable fashion.

Acquiring a four unit building, for example, will require investors to complete one transaction. Nevertheless, said transaction will result in four streams of income. Consequently, single-family home investors would need to complete four independent deals in order to add the same amount of income streams. The latter option would have investors close four escrows, hire four inspectors, apply for four different loans and a myriad of other things.

Buying a multifamily property will save you the headache of closing on multiple deals at a time and, perhaps even more importantly, save you a great deal of time in the process. What’s more, you will be able to build a portfolio capable of rewarding your hard work with financial freedom.

A Great Place To Start

Passive income achieved through the acquisition of multifamily real estate can supplement the golden years of savvy investors and is, therefore, a fantastic endgame strategy. What better way to retire than with multiple streams of income padding your retirement coffers each month? Today’s most prolific investors know it, and it’s time you did, too: passive income is a great exit strategy to retire with. It’s the best retirement vehicle that I am aware of, but I digress. Passive income isn’t simply a great retirement strategy, but also a great foundation to build a career on.

Say, for example, you are just starting out and money is tight. If that’s the case, I maintain a smaller multifamily property is a great first investment. That way, you can actually live in one of the units you acquire and pay down the mortgage you receive from tenants in the other units; the right property is the definition of a win-win. Not only is it entirely possible to pay your own mortgage with the rents you collect, but you will find yourself with a small portfolio in a relatively short period of time.

The Path Starts Here

More often than not, the idea of multifamily real estate intimidates those that are new to the industry. For one reason or another, new investors are nervous about investing in a single property, let alone multiple. It’s worth noting, however, that the “multiple” implied in multifamily properties shouldn’t be a deterrent for new investors, but rather a beacon; one that points them in a promising direction. If for nothing else, multifamily real estate is a great way to get into the world of investing. Not only that, but it can be a great way to start on your path to financial freedom.

Key Takeaways

• It’s entirely possible for multifamily real estate to constitute your entire investment portfolio, from beginning to end.
• Multifamily real estate awards savvy investors many reasons to prefer it as an exit strategy over other options.
• The road to financial freedom can be made easier with the help of the right multifamily properties.