Income Streams From Apartment & Multifamily Investment

The same income or return on investment benefits are derived from residential real

estate investments, but apartment & multifamily investing just multiplies the results. Investors benefit in a number of ways, whether called streams of return or income. It's all return on investment, and at some point these returns are realized as income, even if from savings in payment of taxes. Here's a breakdown of how these look.

Economy of Scale

Though not a return item, economy of scale should be mentioned first. Because the apartment & multifamily project concentrates more units in a smaller area, there are savings in all areas of the cost side of the financial statement. One roof for 20 units is less expensive to maintain. A number of expenses are less per unit just because there are many units in one location. Discounts can be negotiated with vendors as well. So, when an investor is looking at income streams, or return on investment for apartment & multifamily projects, they can be magnified by this economy of scale.

The Expected Appreciation Piece

Though long term, and not the most lucrative of the return items, like any other real estate, the property should appreciate in value over time. Inflation, the enemy of most types of investment, is the friend of the real estate investor in most cases. If it costs more to build in ten years, then the property will be worth more then as well.

Cash Flow in Apartment & Multifamily Investment

The most important piece of the income stream from apartment & multifamily investment is the cash flow from rents after expenses. The concentration of units in one area decreases expenses, and it generates better cash flow. This is the most valuable piece of the return on investment piece. These cash flows create comfortable lives, retirements, and ongoing income for the entire holding period.

Paying Down the Mortgage

As value increases over time, the owner is also paying down the mortgage. This increases equity, and some investors borrow against it for leverage and more investments.

Tax Advantages

All of the tax advantages of owning single family residential rental homes are available to apartment & multifamily investors. They're just multiplied by the larger number of units and higher values. Some investors are able to use the tax advantages to increase income on the subject property, or reduce taxes related to other investments.

Unlike stocks and bonds, apartment & multifamily investment properties generate income in various ways, and in a big way.

by: karenhanover

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