Is Now a Good Time to Invest in Real Estate?

Is Now a Good Time to Invest in Real Estate?

Heightened Inflation, rising interest rates, and trillions of stimulus dollars injected into the economy is affecting everyone as prices and labor costs rise in varying industries. So how does this impact someone who wants to invest in real estate?

Let’s start by quickly defining inflation as “a general increase in prices and fall in the purchasing value of money.” Everything from gas, food, to industrial products become more expensive and consumers can’t buy as much of it. A person who could once afford a house might be forced to rent instead.

Real estate is also directly correlated to low interest rates, which allow people to buy more, thus also causing a rise in house prices. So, with high inflation, everyday consumers are affected in what they can buy.

People who keep cash in a savings account are essentially losing money because of the effects of inflation. Typically, a savings account might generate 0.5% – 2% at best, but when you subtract the percentage of inflation, you end up with overall negative returns. So, an investor investing in a 7% deal is getting a better deal than the investor not investing at all.

As mentioned, the Fed stimulated the economy to encourage consumer purchases and is raising interest rates to combat inflation.

Here is an example of what that means to consumers: Let’s say Bob is shopping for a home, and the interest rate was 3.5%, which was going to make his payment $2155. Then interest rates rise to 4.5% and now his payment is $2432. Bob may no longer be able to afford the house payment with that $300 per month increase. So now Bob must look for a smaller house, or even rent.

Investors could also be impacted by increasing interest rates, depending on their business plans. For example, let’s say Mary has a lease contract with a tenant at a locked in rate for a 10-year lease. She also has a mortgage of $2000 per month at 4.5%, but it has a 5-year balloon on the mortgage that comes due at the end of 2022. This means she must renew her mortgage at a higher rate now. Thus, her monthly payment increases to $2500 per month. Now her expenses have increased, but she cannot raise rent on her tenant, which puts her investment underwater.

Real Estate Syndicators must make business plans with all of this in mind. Any project with short-term debt or non-fixed debt will be forced to use higher rates later if not locked in.

So, is now a good time to invest in real estate?

Absolutely! Let me explain why:

  • Investing in hard assets of value (real estate) protects against inflation

  • Investing in appreciating assets with returns counters inflationary negative returns

  • Rates are still incredibly low

  • Rental growth is increasing yearly and expected to continue

  • Home ownership is on the decline, meaning demand for rentals is rising

The currency has been devaluing steadily for the past 50 years. However, a broad retrospective look at real estate over the past 50 years shows that almost all asset classes have experienced dramatic resilience against inflation.

Three things get wiped out in inflation:

  1. Purchasing power for those on fixed income

  2. Savings get wiped out

  3. Debt gets wiped out

Since real estate investors tend to use a high proportion of debt in their investments, they almost always end up being the beneficiary of inflation because those long-term loans get devalued disproportionately compared with all the other elements associated with real estate. Rents go up in price. Operating expenses go up in price. New Construction goes up in price. It’s the last item that causes existing real estate to rise in price. Since the loan on a property doesn’t go up due to inflation, the increase in price is always to the benefit of the equity holder. Therein lies the inflation hedge.

In summary, if you want to protect your capital and increase returns, investing in cash-flowing real estate syndications in growing markets with long-term fixed debt is the best plan during inflationary periods.

Investors Benefit from Inflation

Investors Benefit from Inflation

Investors Benefit From Inflation

Investors Win

Today, most interest rates are lower than the rate of inflation. 

Sure. That’s really good for real estate investors.

But it’s kinda backward. Why would banks keep making loans if their real yield is negative?

For example, banks are looking at 3% loan interest minus 5% inflation. This equals a -2% bank yield.

Yes, it’s more nuanced than that.

But you don’t have to get as wonky as a bespectacled professor to understand this stuff. 

The simple fact is that savers and lenders are losers. Debtors and borrowers are winners.

Cooling Inflation

The two primary tools that the Fed uses to cool high inflation are: 

  • First, they slow dollar printing (called ” tapering”)
  • Second, they raise interest rates (called “lift off”)

The Catch-22 is that with everyone bursting at the seams with debt – including the US government itself – this economy cannot cope with higher rates.

Does this mean that inflation will run amok? 

Investors Win

If so, the cost of everything explodes for consumers – vases, firewood, haircuts, coffee, furniture, soap, Philadelphia Phillies hats, carrots, blue cheese, and Star Wars action figures.

It’s the investor class that benefits – holders of gold, cryptocurrency, many stocks, and especially real estate investors.

Consumers lose. Investors win.

Be an investor. Build wealth. Own assets.

Investing in Real Estate vs. the Stock Market

Investing in Real Estate vs. the Stock Market

Investing in Real Estate vs. the Stock Market

Of the two types of investing, investing in stocks and shares seems on the surface to be more accessible to many than the world of property investment.

So, why would you consider investing in real estate?

Both types of investment have their pros and cons but the beauty of investing in property lies in the low risk, stability, and predictability of the investment.

When you add incredible tax advantages, hedge against inflation and control of investment to the list of positives then choosing to invest in tangible bricks and mortar over stocks and shares makes much more sense.

Let’s take a brief look at some of the pros and cons.

Stocks and Shares – Positives and Negatives


1. Volatility

During a dip in the economy, you may be subject to the disappointment of diminishing funds as the profitability of the company drops.

Stock prices experience extreme short-term volatility, depending on the day’s events. Most smart traders do not react to these volatile market cycles but take a long term approach; however, the unpredictability of stocks can take its toll emotionally.

2. Risk

Stocks are volatile by nature because they depend greatly not only on the economy but also on the performance of a company and more importantly on the performance of the flawed individuals that run those companies.

If a company goes bankrupt then the money that you have invested in those stocks is completely dissolved.

This is a bigger risk than many are willing to take; many investors prefer to have their capital tied up in an investment over which they have a greater degree of control.

Negative publicity can also affect stock prices unexpectedly and in this day and age of instant news and of fake news, the volatility goes through the roof.

For example, on January 29, 2013, Audience ($ADNC), a voice processing company, found itself in muddy waters, literally, after a Twitter account named @MuddyWaters published a tweet about a false report in which the company was being investigated by the Department of Justice. The tweet set the company’s stock into a 25% drop. Muddy Water’s published a tweet after, clarifying the hoax.

  1. Ambiguity

Accurate stock analysis calls for a great deal of study. Even many honest experts admit that they are barely scratching the surface when it comes to accurate in-depth analysis.

When you invest in stocks you effectively own a portion of the company that you are investing in. If that company manages to thrive then the value of your stock rises and you win. When the company struggles, you lose.


1. Passive Income

The entire process of investing in stocks can be automated.

Of course, when it comes to investing in property, you don’t have to be the one dealing with tenants’ problems. When you invest in a property deal that is syndicated by someone else then this means that your real estate investment income will effectively also be 100% passive. You are several steps removed from the day to day management of the property.

2. Liquidity

Buying and selling stock is a relatively straightforward and speedy process with low transaction costs. No tangible asset is being exchanged so the transaction is quick and inexpensive. The process of actually buying and selling stocks is obviously much more straightforward than buying and selling a property which often takes two or three months or more.

3. Diversification

Due to the relative ease of buying and selling stocks, it stands to reason that it would also be fairly simple to spread your capital across different stocks. This is a way to combat the volatility of the stock market where the prices of individual stocks fluctuate daily. Clearly, it would take a much greater investment of capital to diversify your real estate portfolio in the same way.

Real Estate – Positives and Negatives

Real estate is a tangible asset and as such for many investors, feels more real. A great appeal of this type of investment is its stability.

For many millions of people, this kind of investment has generated consistent wealth and long-term appreciation.

Real estate investment provides a very consistent and stable rental income. Having a home is a vital necessity for all people, and as a result, rental investors are relatively protected even during economic downturns.


1. Lack of liquidity

With property, you can’t just sell it at the end of the trading day. You can’t go back on your decision to invest in a property at the click of a key on your keyboard.

It may be necessary to hold the property for several years to realize the anticipated big returns.

It’s interesting to note however, that most stocks dividend yields hover around 4% or less annually.  When you invest in a multifamily real estate deal, you start receiving income almost immediately. Investors are getting distribution checks every month from rental income and routinely the average annual returns even after fees, inflation and taxes, are above 10%.

2. Lack of diversification

If you’re putting all of your money into real estate you might be limiting your diversification.

In contrast, with stocks, by means of an index or mutual fund, you can have easy diversification.

However, diversification can be achieved in real estate investing; well-qualified advisors can help you to spread your investments across different communities and different types of property.

This is another advantage of syndication.

3. Transaction Costs

As we have seen, stock trading has much lower transaction costs than real estate.

Real estate is a longer-term investment and transferring property is expensive. There are title fees, attorney fees, agent commissions, transfer taxes, inspections, and appraisal costs.

Real estate is a tangible asset and as such for many investors, feels more real. A great appeal of this type of investment is its stability.

For many millions of people, this kind of investment has generated consistent wealth and long-term appreciation.

Real estate investment provides a very consistent and stable rental income. Having a home is a vital necessity for all people, and as a result, rental investors are relatively protected even during economic downturns.


1. Cash Flow

Property investment provides an opportunity to invest for cash flow which means buying a rental property for the income it generates each month.

With skillful management, this cash flow income can be increased significantly after your investment.

The passive income from your real estate investments can dramatically improve your quality of life.

Rental properties give a steady source of cash that keeps up with inflation.

With smart investment advice, real estate investing will bring a consistent stream of passive income.

Many investors are often able to earn cash flow completely tax-free.

2. Tax Advantages

The government gives many tax advantages to those that effectively help them with their responsibility to provide suitable housing for the populace. Owning real estate brings many tax advantages, not least of which is depreciation.

Depreciation is a key tax advantage with real estate investment.

Real estate investors earn back the cost of depreciation over a period of time after the initial purchase.

Because you are depreciating an asset that increases in value, you receive a tax credit accordingly.

This tax credit is received in addition to property maintenance and other costs that you can take away from the rental income you receive.

When you add in ‘bonus depreciation’ and ‘1031 Exchange,’ the tax advantages are truly extraordinary.

3. Hedge against Inflation

Depending on the type of securities you hold, Inflation can be problematic. Real estate investing serves as a hedge against inflation. The value of the property is tied to inflation as replacement cost goes up and the rent of the tenant is adjusted upward.


Investing in multifamily properties brings excellent returns with low volatility and many other financial advantages.

A great advantage of investing through syndicates rather than making a self-directed investment is that you get to leverage the investment company’s expertise. 

With a syndicator, you can bank on the knowledge and skills of several real estate professionals. 

Many investors don’t have the time or inclination to learn every aspect of owning and managing real estate investment, for example, negotiating purchase agreements, financing a purchase, negotiating leases and managing the property.

We look forward to supporting you in your desire to expand your wealth and reach your goal of financial freedom by means of multifamily real estate investment.

Think Multifamily Is Out Of Reach? Think Again!

Think Multifamily Is Out Of Reach? Think Again!

Think Multifamily Is Out Of Reach? Think Again!

If we look at a typical multifamily investment project acquired through syndication, where a sponsor puts together a deal and raises funds for the deal from investors, there’s going to be an opportunity for those investors to own a piece of the project and participate in the cash flow, capital gains, and all the reasons we invest in real estate. There are a few steps to investing passively in these deals. Investing passively in syndications can be a true turn key deal, where you’re not doing any of the work. You’re not making design decisions or finding the property or handling the asset management, etc. It’s truly turn key. It’s mailbox money and you are getting all the benefits of being a partner in the deal. You will get a depreciation break on your tax return and this can result in something almost kind of magical for people who haven’t heard of it before. So while the project is generating cash flow, you’re getting distributions every quarter. Then at the end of the year, you are also getting a paper loss, meaning that it didn’t happen in real life, but it is a negative dollar amount on what is called a K1, passed through to you. That is a fantastic benefit of the tax code that we can take advantage of as real estate investors, to get cash flow and get a paper loss. If you are a high-income earner, it’s a very attractive option. In fact, many investors are looking to these investments primarily for depreciation and the K1 loss at the end of the year, so it is a huge benefit.

So what are the steps to investing passively in a project? First of all, this whole business is relationship based. You will need to find a sponsor who has experience and who you know, like, and trust. I would not advocate doing business with someone you don’t like. Obviously if you don’t trust them, you’re not going to do business with them. You want to get networked, and you want to get some kind of deal flow. You need to have deals put in front of you that you can evaluate. You need to have some fundamental knowledge of how to evaluate deals.

Some things to look for and understand is in a passive deal are whether a preferred return is provided, what is the expense ratio on the deal? What is the business plan and how will the sponsors execute that business plan? How much capital improvement is budgeted? What is the expected rent growth? These are all questions to review with the sponsor. Understanding these questions and your own risk tolerance will allow you to evaluate whether or not a deal is within your comfort zone. So you will need to find some sponsors and get in some deal flow that you can start evaluating. That is the first step.

The second step: obviously you need capital. Typical minimum investment on a multifamily project is $50,000. More experienced sponsors that have a large database or group of investors may be as high as $100k, $200k, or $300k to get into a project. But typically, in the multifamily syndication space, you’re seeing investment minimums of $50 – $100k. If you don’t have that capital to invest, then passive investing in multifamily may not be for you at this time. But there are pools of capital that people don’t realize is available to them. Somebody who is working a 9-5 at a corporate job, between their family obligations and monthly expenses, might be spending all their money and putting a little aside for savings. But they may also have a $500,000 IRA or 401k. This is capital that you can use in a multifamily investment. There are ways to take that capital in the IRA or 401k and self-direct it into multifamily investments. They can’t be your own deals. It needs to be an arms-length transaction. It needs to be someone else’s deal. But that is a huge pool of capital that many people don’t realize can be tapped for multifamily investing . It is a lot of money in the American retirement system, and you as a passive investor, that might be a capital source that you can go use.

Other capital sources that we have seen, and that I started out early in my investing career to get some investable capital, selling cars that cost too much; capital in single family residences. It is very common to take equity that you’ve built over the years in some single-family residences. We have countless investors that do that. They say, hey, I have these houses over here but I’m ready to move up to the multifamily space and these houses have some equity. Maybe I’m going to refinance out that equity and put it into a passive investment deal or sell the house. But there are pockets of equity. We certainly wouldn’t advocate going into debt to finance an investment. If you’re going to invest passively in a multifamily project, you need that to be cash. So is it cash in the bank, 401K, IRA, or liquidate some other assets, like real estate. But it needs to be cash. Don’t put debt into a project. That is like stacking two ladders on top of each other. Never a good idea!

Once you understand how to look at deals and if it is something you want to invest in and you found some sponsors whom you know, like, and trust, and you are evaluating deal flow, then you are going to go through the process of investing. It is fairly simple. You will see a deal come out; there are some documents to sign, a private placement memorandum, a subscription agreement, investor questionnaire, and then you’re going to wire funds into the project typically 2-3 weeks before the closing, and then the project closes. You will get monthly updates after that, and quarterly cash flow checks start coming in.

While the education is important (and that is a requisite at the front end; you do need to get educated) once you got some deal flow, the actual process of investing is simply sign the documents, wire the funds, check your email every month. If you want to be more hands on and tour the property or ask the sponsor questions, certainly that is on the table, but beyond the requirements as a passive investor. If you have a W2 job you like or maybe you’re already retired and don’t want to mess with evicting tenants, passive multifamily investing is a great way to still be a partner on a project and benefit from the sponsors work. Perhaps you are an active real estate investor but are worried about how to take your investment activity to another level, passive investing is a great way to scale.

The return projections on a typical multifamily investment project, from a very high-level perspective, sponsors will typically target a 6-8% return cash on cash every year. So if you invest $100k in a project, that sponsor is going to want to deliver 6-8k per year back to you. That beats lots of investment instruments, like CDs money markets, and other fixed income instruments like that. It may even beat the stock market when you consider the S&P 500 has an average annual return of 6-7% over long periods of time. So, you’re getting 6-8%, sometimes even 10% cashflow on your money every year. Then the sponsor is looking to get an equity multiple for you. This is generally of close to 2 times over a 5-7 year holding period. So, the sponsor is looking to double your money in 5-7 years. This is a typical underwriting approach and what sponsors are looking for. Now, if a sponsor can get in and out of a deal in two years, and they didn’t double your money, but they give you a 30%-40% cash on cash return, you would take that, right? So, that can be the case sometimes where a sponsor underwrites a five-year hold, but gets it done in two years. As long as that annualized return is really great, then investors are going to be happy. And, as we talked about before, at the end of the year, you’re likely getting a K1 with a paper loss because of the accelerated depreciation!

So, that’s the overview of passive investing. You need to

·      get educated

·      find sponsors you know, like, and trust

·      start looking at deal flow

When the time comes:

·      sign documents

·      wire funds

Most sponsors run a first come first serve operation because, let’s say you’re raising $5 million, and you have 35 investors on a project, and you have 200 potential investors. It is too difficult for a sponsor to go out there and manage expectations individually. It’s much more efficient for a sponsor to come out with a project, announce it to their investors and have it open for funding until it’s not. So, the key for the passive investor is to get educated so that you’re able to strike quickly when the time comes. Because, once it’s full, that’s it; you’re done! People that have been passive investors in the past know to ask questions of the sponsors up front and get to know the sponsor up front, get educated so that they can very quickly evaluate a deal, and strike quickly when the window opens because it is typically not open for very long with an experienced sponsor.

So that is an overview of passive investing and one of the best ways to participate in multifamily investments without having to do any of the work. Download the free white paper to learn more about passive investments in multifamily at

Multi-Family Property Classifications and Your Investment Strategy

Multi-Family Property Classifications and Your Investment Strategy

Multi-Family Property Classifications and Your Investment Strategy
What is meant by the multi-family property classifications A, B, C, and D? In investment terms which of these property types are classified as core assets and which can be considered core-plus assets? If you are looking to pursue a conservative investment strategy or if you prefer a more aggressive one that has the potential to deliver a higher yield in which class of multi-family property should you be looking to invest? All these questions and more will be clearly answered in this article.

Classification – Class A

Class A multy Family home
Class A multi-family properties are buildings that are less than 10 years old. If they are more than 10 years old, they will have been extensively renovated. The fixtures and fittings will be of the very best quality. The amenities will be comprehensive and of a luxury standard. While Class A properties tend to generate a lower yield percentage, they can grow exponentially and they tend to hold their value even in major economic downturns. In terms of their investment profile, they are considered to be core assets. An article on multi-family investing at explains why Class A apartment buildings, with a ‘core asset’ risk profile, offer a lower yield percentage:- “Owners purchase these properties using lower leverage, therefore with lower risk.  REITs and institutional investors purchase these assets for income stream.  The lower risk profile results in lower returns in the 8-10% IRR range.” A property in the Class A category would not likely have a “core plus” risk profile unless it were slightly downgraded in some way perhaps by a less favorable location, housing type or a number of other factors.  

Classification – Class B

class be property multy family home
Class B properties are older than class A properties. Usually, class B properties have been built within the last 20 years. The quality of the construction will still be high but there could be some evidence of deferred maintenance. The fixtures and finishings will not be as high quality and the amenities will be limited.  

Classification– Class C

Class C properties are built within the last 30 years. They will definitely show some signs of deferred maintenance. The property will be in a less favorable location and it will likely not have been managed in an optimum way. Fixtures and finishings will be old fashioned and of low quality. Amenities will be very limited. Both Class B and Class C properties can be candidates for a ‘value add’ investment strategy. By bringing deferred maintenance issues up to date or by upgrading the property by means of an interior and/or exterior renovation there is an opportunity to increase the tenant occupancy and receive a higher return on your investment. In his article, ‘what are the 4 investment strategies?’ Ian Ippolito explains why pursuing a value add investment strategy is a higher risk:- “Much of the risk in value-added strategies comes from the fact that they require moderate to high leverage to execute (40 to 70%). Leverage does increase the return, but also increases the risk, and makes the investment more susceptible to loss during a real estate cycle downturn.”  

Classification – Class D

Class D properties are generally more than 30 years old. The property will be showing signs of disrepair and will be run down. The construction quality will be inferior and the location will be less desirable. The property may be suffering due to prolonged and intense use and high-level occupancy.
                      Both Class C and Class D properties can be candidates for an ‘opportunistic’ investment strategy. Because these properties require major renovations they are the highest risk investments but they can also yield the highest returns.


In overall terms, the US multi-family real estate market continues to give excellent returns for well-informed investors. This article has clearly explained how different types of multi-family properties are classified. The article has also given an overview of how each class of property fits the different types of investment profiles. We trust that this information will assist you in assessing your multi-family real estate investment goals. For further assistance please connect with our team.