Investors Are Putting Their Money Into Multifamily Housing By Greg McKinney Mineola TX

 



Hello, I'm Greg McKinney a long time real estate investor from Mineola Texas. This ever changing real estate market we are currently living in is fascinating to watch. One area growing rapidly is multifamily housing. Many investors are discovering the benefits of investing in multifamily housing. They have also discovered there is a huge increasing demand for these types of residences. Younger people are renting longer before purchasing their first home and older adults are moving into smaller spaces. These are to two main contributing factors to the increase in demand for multifamily housing. This type of housing has traditionally always done well no matter what the economy is doing.

As I previously mentioned, the demand for this type of housing is driven by 2 main sectors. The younger generation is renting for longer periods than ever before. Many think the primary reason is student load debt. Their student loan debt is pulling down the actual amount they can borrow for a home loan and it is very difficult to find a decent home at a lower price point during this current housing boom. The older generation is looking for smaller places after their children have moved out which is also driving the demand in multifamily housing. Some are also electing to sell the homes they have lived in for decades in the hot real estate market and cash in on the tax free equity they have in their homes. Increasing property taxes due to increasing home values is also playing a part in some in older adults deciding to sell their homes and move into an apartment or duplex.

Many experts who follow these market trends believe close to 350,000 units need to be built each year to reach the demand in about 10 years.



There are many reasons investors should take a close look at the multifamily sector.

·         The tax benefits are huge for investors who own rental property such as multifamily housing. The property can be depreciated while at the same time it is appreciating in value. This is a huge tax break for the investor.

·         Housing is a large expense for each American and investors can tap into that large monthly expense.

·         The amount investors can charge in rent will increase if their units are maintained properly.

·         The demand for nice apartments and duplexes is always there. The vast majority of apartment complexes in the United States are over 40 years old. The style and size of these apartments are simply not as desirable to many renters especially the younger generation.

·         With investors having the ability to adjust their rents of units every 6 or 12 months the investors are able to follow the ups and downs in the economy.

·         Obtaining financing on multifamily units is relatively easy for well qualified investors. Lenders are quick to loan on these type of properties because the demand is so strong and the default rate is very low.

·         The vacancy rates on these types of properties is traditionally very low. The current low interest rates are also making it more lucrative for investors to take on long term debt purchasing multifamily housing.

·         Another big benefit to the investor is you are spreading you risk out over multiple people in one building. The investor is not relying on one person or business to cover the cost of the building. For example, if the investor was renting out a small office building they may have one renter in the property and if that company closes the investor could be stuck with an empty building for months.

So as you can see there are many benefits for investors to purchase multifamily properties. The risk is low, the demand is high and the tax benefits a great. I believe many more investors will start looking at this sector over the next several years.

Greg McKinney Mineola Texas

 


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