What Does Everyone Need to Know About Multifamily Syndication Returns

by | Dec 22, 2022 | Property Investment Firm

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Multifamily Syndication Returns

Multifamily syndication returns exceed those of typical investments. However, each property must meet specific criteria to deliver on these claims.

Here is what the average investor should expect:

• 5-7% Annualized Cash-on-Cash (CoC)

• 1.8-2.0x+ Equity Multiple (EM)

• 16-20%+ Average Annual Return (AAR)

• 13-16%+ Internal Rate of Return (IRR)

Class C multifamily housing is considered, but it must have been built by 1980. In addition, purchased properties must have an 80% or greater occupancy rate. Finally, they must be opportunities with proven value-add potential, forcing appreciation.

Cash Flow

Commercial multifamily real estate is a proven way to invest in becoming landlords. Leverage their professional expertise and create stable tax-advantaged income streams.

Then, you can use that money to buy time back from work and do what matters most to you. Stabilized multifamily assets can provide steady high single-digit percentage annual cash flows. Income from this accumulates and gets distributed quarterly.

Forced Appreciation

Commercial properties are valued by their income, unlike residential homes. Increasing the property’s income also leads to its value increasing. They find properties where they can improve the interior and exterior.

Improving these spaces can attract higher-paying tenants and increase cash flow. Consequently, the property’s value rises, and it can be done lightning fast. This additional value can amount to an extra 20% to 40% upon the exit of the deal.

Tax Benefits

Multifamily investors are eligible to claim several tax benefits. 1031 exchanges let you defer capital gains taxes indefinitely. When investors roll their unrealized gains into another asset, they do not pay.

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