Multifamily investment strategy to boost investment portfolio returns.
Diversify in multifamily investment strategy to lower volatility and boost portfolio returns.
About #multifamily investment strategy
What is a multifamily investment strategy?
A multifamily investment strategy involves the ownership and management of multi-unit properties to generate rental income. One of the most profitable multifamily investment strategies is investing in apartment buildings. Compared to other housing-related real estate investments, apartment buildings usually have a higher occupancy rate and rental income potential. Plus, a significant financial advantage of this strategy is you can use the economics of scale to spread out the expenses across multi-units, diluting their impact on cash flow.
If a multifamily property attracts you, you should investigate the location, demographics, condition, and prospects for rent appreciation. You should also find out the area's present and projected demand for rental housing. Finally, the terms of financing on the purchasing contract must be reviewed.
Why invest in multifamily?
fig1 Why Multifamily? Source: Carter Multifamily.
How to analyze multifamily investment opportunities?
There are different approaches to analyze—our Paperfree's internal process to analyze multifamily investment is next:
- Purchase Price. Find intrinsic value and compare it with an acquisition price.
- Income. Analyze the NOI, Net Operating Income.
- Cash flow. Forecast cash flow for different operational scenarios.
- ROI. Calculate the ROI and Return On Investment.
- ROI. Calculate the net EM, Equity Multiplier.
- Run all calculations for different scenarios of main parameters: vacancy and rent rates.
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