Finance was not my first choice as my specialization, but it was part of the careers I wanted to study because I am sure I want to be a business person and even start my own business after getting my BBA degree. I grew up in a family with their own business, even my uncles and grandparents have their own businesses. Since I was little I used to wonder how they manage their sales and make a profit. As I grew up, stocks also seemed interesting to me and it is something I want to learn to start an investment in some companies that would increase my pocket, as another way to make extra money without including the business.
No doubt my family experience in the business world has contributed to my curiosity about financial management and investment opportunities. After moving to the United States, this country influenced me more in the decision to study business because New York City is more widely known as the city of business since it is the global financial center and important commercial center in the United States, which I think is the best place and most likely to succeed in my future business. On the other hand, finances can be beneficial in many aspects of both personal and professional life, such as managing money effectively and creating savings. Additionally, studying finance can open many doors for me or provide me with the skills and knowledge necessary to work in a wide range of careers in the financial sector, such as banking, investment management, financial analysis, etc. It even helps me understand how business financing, cash flow management, and overall financial decision making work for business growth. Therefore, since one of my dreams is to create my own clothing line, it is essential to study finance to be able to launch my line successfully.
Because in order to make my company persist in the commercial market, good financial management is the key to go further as other clothing brands have done so far. However, the ability to communicate is also a fundamental part for an entrepreneur or for this specialization, and I am clear that it is not my strength, but I am practicing so that my future business can go further and be a millionaire.
Investing in real estate has been a proven way to generate passive income, and the multifamily property market offers several options for investors to get the most out of their investment. Among the many choices in real estate, multifamily properties stand out as an attractive opportunity for investors seeking a long-term, low-risk investment (Baker, H. K., & Chinloy, P. 2014). These properties, which include apartment buildings, condominium complexes, and duplexes, offer multiple rental spaces that cater to a diverse range of tenants, such as students, foreigners, and those who may not be in the market to buy a property for themselves (Willis, H. 2016). The appeal of multifamily properties lies in their potential to improve investor cash flows and increase net operating income. In addition to being a great option for experienced investors, multifamily properties can also be a smart investment for college students looking to create passive income and increase their wealth (Turner, B. 2022).
NYC Multifamily Sales Post Best Year Since 2016
The field of real estate is considered a large field and both commercial and retail are favorable, which has become so popular today, as commercial real estate investors build or buy a building for the purpose of generating income, monthly rental income or to operate their own business on that property. Commercial real estate investors can also partially lease their property and then collect rent from the business owners who are using the space in the building. However, multifamily properties are one of the most popular, given their ability to generate predictable and routine income in the United States.
Who May Be Affordable to Invest in Multifamily?
Investing in multifamily properties can be a great way to build wealth and generate passive income. However, it’s important to keep in mind that this type of investment requires a significant amount of capital upfront.
However, they will wonder if university students can invest, and the answer is yes. Although while college students may have limited financial resources and may not be in a position to invest in multi-family properties on their own, there are a few ways they can still participate, such as REITs, Crowdfunding or partner with other investors to invest in multi-family properties.
Real estate investing can be the playground of the rich and any wealthy person can witness the wonders, but middle class people and even college students can also witness this business where the value of their assets could be always predicted to appreciate. Over the years, real estate has diversified into many shapes and types, with each person or group creating a pioneer in their specialty. Hardin III (2014) argues that multifamily homes generate cash flow that typically more stable over time because any individual tenant or lease has less of an impact on the overall valuation, encouraging many investors to want to enter this investment field that has become popular. NYC ranks among the most multicultural cities in the United States (Newman, K. 2020), which means that there are many foreigners. Many will wonder what coincides in having foreigners and multifamily properties, the answer tends to be that a greater concentration of foreigners in a specific location increases the probability of renting properties. According to data from Pollack (2023), New York City is considered the best city to invest in this year 2023, she reports that “NYC multifamily properties have gone up 13% so far year over year, with average occupancy levels climbing to approach 79.1% on average versus 74% in 2021.” Multifamily properties are highly desirable investments in the real estate market, especially in cities like New York, where a significant number of people cannot afford to purchase a home and prefer renting.
Pros & Cons of Investing in Multifamily
Multifamily investing can be a lucrative option for real estate investors, but it also has its share of advantages and disadvantages. Here are some of the pros and cons of investing in multifamily properties:
Pros:
Cash flow: Multifamily properties can generate significant cash flow due to multiple units generating rental income.
Lower risk: Diversification of tenants across multiple units can help reduce the risk of vacancy and default on rent payments.
Economies of scale: Multifamily properties offer economies of scale for maintenance, property management, and other operational expenses.
Appreciation: Multifamily properties can appreciate in value over time, increasing the potential for capital gains.
Cons:
High upfront costs: Multifamily properties require a larger initial investment than single-family homes.
Management challenges: Managing multiple units and tenants can be complex and time-consuming.
Dependence on the local rental market: The success of a multifamily investment can be highly dependent on the local rental market and economy.
Legal and regulatory requirements: Multifamily properties are subject to more legal and regulatory requirements than single-family homes.
Overall, investing in multifamily properties can offer a strong cash flow and potential for appreciation, but it also requires careful management and attention to local market conditions and regulations.
Multifamily is Long-Term Investment
Even in times of economic inflation, multifamily properties remain a good investment due to their appreciation in value over time, making them a worthwhile long-term investment. As long as the property is well-maintained and in a desirable location, there will likely always be demand for rental units. Additionally, according to Willis (2016) multifamily properties can appreciate in value over time, providing investors with the potential for capital gains. This can be especially true in areas with growing populations and limited housing supply.
Cash Flow Every Month
According to a survey I conducted with Baruch students, the more tenants are paying rent, the higher the likelihood of securing a positive cash flow for investors or owners because is the most safety. Investing in multifamily properties generate cash flow through rental income. Multifamily properties are buildings that have multiple residential units, such as apartments or townhouses, within a single structure. As a landlord, you can collect monthly rent from your tenants, which can provide a steady stream of income. The amount of cash flow generated will depend on various factors such as the rental rates, occupancy rate, expenses, and financing costs. Therefore, 80. 6% of 31 Baruch students think that multifamily is one of the safety investment that people of middle class and students can invest.
Depreciation in Multifamily Properties
When there seems to be inflation in the economy of a country, money yields less, people know that prices will increase every day, therefore they prefer to buy before they can no longer do so. However, even if inflation affects certain people, it’s still beneficial for certain industries and for those who are investing in multifamily properties thanks to depreciation (Bokhari, S., & Geltner, D. 2016). Multifamily investing has long been viewed as real passive income, and while there are other investments that can generate passive income, depreciation may be one of the best for increasing returns (Kielar, H. 2023). However, while the value of a building depreciates over time, reducing its tax base, the value of a real estate investment can increase over time, generating an increased homeowner equity. Additionally, according to Kielar, H (2023) depreciation allows for the reimbursement of expenses without having to pay out of pocket or write a check, essentially allowing you to get a tax deduction for depreciation of real estate over time, therefore, assets that appreciate in value also have lower tax liabilities. On the other hand, Trion Properties (2023) explains that multifamily properties can depreciate over a period of 27.5 years, even if the property technically appreciates in value depreciation can be used to offset a significant portion of the rental income collected each year, making this a very attractive asset class for investors of all stripes such as college students or beginners in real estate. Hence, if any inflation occurs in the economy, the investor wins the same way most of the time since the depreciation adds value to his property.
