Prepare for Retirement with Multifamily Real Estate Syndication

With uncertainty in the economy becoming the new normal, it’s also normal that you may be thinking about your retirement savings and how you’re going to maintain your lifestyle when you do eventually retire. Traditional 401Ks and IRAs are subject to inflation and interest rate changes, so it’s hard to know how much your savings will be worth when you need them. 

The most important reason to save for retirement is to ensure that you have enough money available when you stop working to maintain a comfortable lifestyle during those years. Social security benefits will only cover so much, and if your post-work income doesn't replace pre-retirement earnings, then you must begin saving as soon as possible. Additionally, contributing early will allow compound interest to work in your favor, creating more investment dollars over time and increasing the size of your nest egg with minimal effort.

What should investing for retirement look like?

There are several different types of retirement accounts individuals can choose from including 401(k)s, IRAs (Individual Retirement Accounts), SEP IRAs (Simplified Employee Pension IRA), Roth IRAs (Individual Retirement Accounts), HSAs (Health Savings Accounts), brokerage accounts and annuities among others. Each account has its distinct advantages depending on goals and objectives.

Limited risks

Multi-family real estate investment is relatively low-risk, but there are three things to be aware of. One risk that comes into play is when some investors hear that a particular market is “hot,” and don’t do the necessary due diligence regarding vetting the market in addition to the actual property. This means their capital is tied to a single market, and if the market tanks, their investment will be going right along with it.

The economy is of course always changing, and there may be unforeseen dips in real estate markets for a number of reasons that can’t be projected. There is also a lot of competition in the multi-family real estate market. Everyone is working hard to gain new tenants and keep vacancy rates at optimal levels, and if there’s a competitor near your multifamily property offering renovated or newer units, you may lose some tenants, which will impact the cash flow and net operating income.

Protected assets

As an asset class, multi-family real estate is considered relatively low-risk due to its consistent cash flow and long-term capital appreciation potential. Additionally, multi-family investments are typically protected from economic downturns because tenants still need housing regardless of the market conditions.

Leveraging tax benefits

Investing in multi-family real estate can help leverage tax benefits in several important ways. First, investors can take advantage of depreciation deductions on the property and its components, such as appliances and floor coverings. This can significantly reduce taxable income in the short term. 

Second, owners may be eligible for special capital gains exemptions when they sell the property at a profit. These exemptions allow them to keep more earnings instead of paying taxes on the full sale price. Finally, investors may be able to claim tax credits for rehabilitating historic properties or building energy-efficient homes that meet certain green standards. These strategies can help investors maximize their returns and minimize their overall tax burden.

Reducing exposure to inflation

Rental income generated from multi-family housing tenants is typically adjusted for inflation each year, meaning that investors can realize steady income growth over time. Additionally, because real estate values tend to appreciate faster than the general inflation rate, multi-family investors can benefit from above-average returns on their investments. This gives them a hedge against rising prices and protects their assets from depreciating due to inflationary pressures.

What are multifamily apartment real estate syndications?

Multifamily apartment real estate syndications are a type of real estate investment vehicle. Typically out of financial reach for most, a group of investors pools their money to purchase, operate, and profit from larger multifamily properties. These investments typically involve acquiring an existing property or developing one from the ground up. Syndication deals can provide investors with access to institutional-level returns that they would not be able to achieve on their own and typically generate higher cash flow yields than other commercial investments. Syndication groups may also benefit from economies of scale, such as shared management fees and improved purchasing power.

Tax advantages of apartment syndications

Multi-family real estate syndications are highly tax-advantaged. If you’re tired of Uncle Sam using your hard-earned money for investments or policies you disagree with, then multi-family real estate syndication will give you some satisfaction. Under the existing tax code, real estate investors can offset the benefits produced by the income-generating property through an annual tax deduction known as depreciation. The IRS defines the depreciation deduction as “a reasonable allowance for exhaustion or wear and tear, including a reasonable allowance for obsolescence.” When you use cost segregation as a part of your investment strategy, you can get even more tax benefits.

Additionally, there’s a provision in the tax code that allows real estate investors to defer paying capital gains taxes. It’s known as the 1031-exchange. A 1031-exchange allows a real estate investor to sell real property (i.e., not personal property) and reinvest the proceeds into a like-kind investment, deferring capital gains tax in the process. A 1031 exchange means real estate investors like YOU can swap one investment property for another … and defer capital gains and depreciation recapture taxes.

If you’re interested in learning more about investing in multi-family real estate properties, look no further. Premier Law Group is here to help you set up and manage your deal so you can live an extraordinary, fabulous life with a steady stream of passive income. You’ll be ready for retirement in no time, so you can spend your time doing what you love without worrying about your cash flow.


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