Large Multifamily

HOW in the world does someone get into the world of large multifamily investing?? Acquiring a 100-unit building...now that just sounds like an improbable dream...right??

Don't worry, I'll definitely be answering that question.

But first, I want to focus on the asset class itself and give you a thorough rundown of Large Multifamily (80+ units). This is a world I'm very intrigued by as I'm starting to see the power of economies of scale (see my duplex acquisition), and I'm all about THINKING BIG!

Why large multifamily?

• Apartments are I.D.E.A.L. (Income, Depreciation, Equity, Appreciation and Leverage) investments. I didn't make this up, I got it from someone else ;)
• You can get constant cash-flow from the rents and appreciation of the property due to value-add renovations we will be doing on the property. This is one of my favorite parts of the large multifamily asset class!
• You can obtain long term leverage (debt) from Fannie Mae and Freddie Mac agencies
• There are great tax benefits like Depreciation, Accelerated Depreciation, Bonus Depreciation which can offset taxes (talk to your CPA before making any tax decisions)
• Single Family home sales are losing momentum and rental lifestyle is favored 
• Millennial trends show that they are are not as interested in home ownership as past generations

What I love MOST about the large multifamily strategy is the ability to use a VALUE-ADD strategy at a large scale. Many apartment complex investors are applying similar strategies that we're seeing in the single-family/small multifamily world called the BRRRR strategy.

The BRRRR strategy stands for: Buy, Rehab, Rent, Refinance, Repeat.

In a nutshell, you're buying an undervalued asset, fixing it up to bring in more rental income, while at the same time you're raising the value of the asset (because the value of a multifamily property is largely dictated by Net Operating Income). It's a double bonus...increase cash flow + value of the property...WOW!

Once you've renovated, raised rents, and forced appreciation, you can then refinance and hopefully be able to get money back from the bank due to its increased property value. Cash flow may decrease, but ROI should increase substantially as you'll have little (or NO) money in the deal.

So, as you can see, this strategy should be pretty dang intriguing for many of us! Yes, this asset class seems a little intimidating, but if you can get into this world, it could be very rewarding!

Now...if only I could find my way into this world having only invested in single family homes and a duplex. Can someone like me realistically invest in the large multifamily world??

​Here's a clue: YES.

NEXT POST: What is a Syndication?