Benefits of Multifamily Investing — Tax Benefits and Principal Paydown
Providing stability and consistent cash flow over the long term, commerrcial multifamily apartment buildings represent a smart investment in a variety of rental markets. In addition to helping investors pay down their mortgage, multifamily real estate offers a number of tax benefits.
In terms of principal paydown, investors almost always expect an equity increase of 2 percent to 4 percent per year, depending on the exact language of the loan. Investors use income from their rental units to fund their mortgage payments, thereby chipping away at the principal. These principal paydown benefits allow investors to increase their equity while still enjoying appreciation benefits and a steady income.
In addition to their ability to generate steady income, commercial multifamily investments rank among the most tax-advantaged among all asset classes. Investors can write off depreciation costs such as wear and tear, helping to offset capital improvement expenses. Multifamily properties can also undergo cash-out refinancing, which frees up liquid capital for additional investments.