Multi-Family Investments Continue to Be a Strategy for the Ultra-Rich

Multi-Family Investments Continue to Be a Strategy for the Ultra-Rich

June 20, 2017

In the eyes of many wealthy and proven investors, real estate investment is a preferential way to grow your wealth. According to Forbes, the USA hosts the majority of property tycoon billionaires (44) in comparison to any other country in the world. Of these 44 billionaires, the wealthiest American property mogul is Donald Bren, who boasts an astounding portfolio of real estate, which includes 50,000 apartments. As part of the strategy to scale their portfolios, wealthy individuals are looking beyond single-home investments as the avenue to take, and they follow a multi-family investment approach.

There is a leading viewpoint among these investors that single-home investments are more of a liability than an asset. They reason that your capital gets tied up, and these properties do not pay out each month accordingly. For many in this investor class, the buying of a home as an initial investor is seen to be no different than having a simple savings account, where you leave your money sitting in the bank. This is because the money’s true potential is not leveraged.

When comparing single homes to multi-family homes, cash flow is always greater with the latter. In fact, the more units held under a single roof also reduces the risk of income loss. If a property becomes vacant and it is a single home, then there is a total loss of income. In terms of maintenance costs, there is also an economy of scale which favors multi-family homes, as it centralizes the costs in a single roof and garden, just like a private home, but there are more tenants providing a vastly higher income. In addition, the higher income flow will free up money for a property management company to make the investment more hassle-free.

According to the successful real estate entrepreneur Grant Cardone, the best way to get involved in multi-family real estate would be to initially invest in a multi-unit project with at least 16 units. Cardone’s portfolio has already surpassed 4,000 apartments, and he believes that multi-family investments will continue to be as lucrative as ever in the upcoming decade.

Multi-family investment is definitely a trend that is on the upswing. These following factors on the ground indicate that this sector will continue to steadily grow in the upcoming years:

  • The Baby Boomer generation is headed for retirement.

We will be seeing more and more new projects and property conversions to apartment complexes in the future to meet the retirement needs for this generation. Some Baby Boomers will also be looking to downsize from their current private homes to more affordable and suitable multi-family properties.

  • Millennials are looking to rent and not buy.

The millennial generation, which comprises many students and new entrants to the job market, brings a surge in demand for affordable multi-family rental properties in the metro areas. The outlook is that they will be acquiring first-time property-owner status at a far later stage in their lives than their parents.

  • Significant barriers to home ownership.

Today, the levels of home ownership in the USA are at a 50-year low, standing at 63%, according to the US Federal Reserve statistics. In the metropolis areas, this is a driving factor for a multi-family rental market.

Ultra-rich investors have managed to accumulate great wealth through the ownership of multi-unit properties. There is now an opportunity for investors of all sizes to take part in such deals, which were inaccessible beforehand if you were not extremely wealthy. If you are looking to enter the multi-family market as part of your investment strategy, then iintoo is a great place to start. iintoo offers investment opportunities for multi-family projects on its real estate investment platform from as low as an initial $25,000 investment.

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