The real estate industry is full of opportunities you can take advantage of. One of the pathways to consider is multifamily real estate. If approached correctly, this can help you build wealth and create consistent cash flow, even if you’re a beginner. Keen to get started? Read on for tips on how to invest in multifamily real estate and make good returns while at it.
If you’d rather invest without dealing with tenants, repairs, or day-to-day management, real estate syndication might be your best bet. Here, a group of investors pooling their money to buy large properties—like apartment complexes or mixed-use developments.
Here’s how it works: a syndicator (or sponsor) finds the property, organizes the deal, and manages it. As an investor, you provide the capital. In return, you own a share of the property and earn a portion of the income it generates.
What’s great about syndication is its passive nature. You don’t have to worry about screening tenants, fixing plumbing issues, or chasing rent. The syndicator handles everything while you collect your returns.
But here’s a heads-up: syndications often have minimum investment amounts, usually between USD$25,000 and USD$100,000. They’re also long-term commitments, meaning your money might be tied up for five years or more.
If it’s something you’d still consider, look into high-potential projects like Maven Capitol Commons or any others in your desired location that hold significant promise. Just make sure the developer has a strong track record and check the project’s financing and timeline to avoid delays or risks.
House Hacking
About 39% of homebuyers think of house hacking as a great investment opportunity. Here’s how it works: you buy multifamily properties—like a duplex, triplex, or fourplex—and live in one of the units while renting out the others. [1]
Why is this strategy so great for beginners? First, it helps offset your living expenses. The rent you collect from tenants can cover part or even all of your mortgage payments.
House hacking also lets you learn property management without taking on more than you can handle. You’ll be on-site to deal with maintenance, tenant issues, and other landlord duties.
Partnering With Investors
Did you know that investments in multifamily units made up to a third of the total investment in commercial real estate in 2024? Even with this demand, vacancy rates remain at 5.6%. This presents an opportunity you shouldn’t pass up. [2] [3]
But despite your best intentions, there are financial considerations in play. If buying multifamily properties solo might seem a little out of reach, teaming up with other investors could be the perfect solution.
Partnerships allow you to leverage other people’s strengths. If someone is great at market research or risk management, they bring that expertise to the table. Meanwhile, you can focus on areas like market trends, tax benefits, or others you’re more comfortable with.
REITs
Want to invest in multifamily real estate without buying actual property? Real estate investment trusts (REITs) are a fantastic way to get started. The gist of this is that you buy shares in a company that owns and operates income-generating properties, including multifamily buildings.
Here’s the beauty of REITs: they’re incredibly accessible. You can invest with as little as USD$100 and buy shares through a brokerage account, just like stocks. This makes them ideal if you’re still saving for a down payment or testing the waters in real estate.
REITs also offer liquidity. If you need your money, you can sell your shares at any time. That’s a huge advantage over owning physical property, where your money can be tied up for years.
These are some of the high points. However, there are still considerations to keep in mind. Unlike direct ownership, REITs don’t give you control over properties. Also, dividends from REITs are taxed as regular income, which could impact your returns. Do your due diligence.
Direct Purchase of Smaller Properties
Duplexes, triplexes, and fourplexes are great entry points into multifamily real estate. These smaller properties are easier to finance, maintain, and understand compared to large apartment complexes. They also have less competition than single-family homes or massive apartment buildings. Many investors overlook them, leaving opportunities for you to snag a great deal.
From the pros: Train your market research on areas with strong rental demand, such as neighborhoods near universities, business hubs, or transportation links. Also, conduct solid property valuation. Ensure the rent you can charge will cover your expenses.
Closing Thoughts
Getting into multifamily real estate demands a lot of research and financial readiness. Once you get that out of the way, you’re in a great position to make the best of this profitable niche. A great thing to do is to rope in experts who understand real estate investment strategies and soak in their wisdom. Their input can take your investments to a whole new level.
