Christian Osgood breaks down why rich investors buy multifamily properties: housing demand never stops, commercial deals (five units or more) let you leverage heavily with low down payments, and cost-segregation studies accelerate depreciation to create tax-free income.
Chapters
Here's why the wealthy love multifamily. First of all, stability. They're very, very stable. Humans need housing. They will always need housing. If you're providing that in an area where population is growing, there will always be a need. The stability is huge. Second, the ability to multiply wealth. You get awesome debt products, especially in commercial multifamily, 5 units and up, where you can buy properties at 20%, 30%, 40% down. Seller financing, you can do anything from 0% to whatever you make up percent down and multiply the money. The leverage point is huge. And third, the tax benefits. On the larger assets, you can change the depreciation schedule in what's called a cost segregation study. There's other tax advantages, but that's one of the big ones. A lot of the income from multifamily will be either tax-free or tax-deferred, which is a big deal if you're a wealthy individual.