There is a rise in the desirability among real estate investors searching for the perfect multi-family property in Southern California. Real estate remains one of the best investments you can make, even as interest rates and prices increase. Housing is one commodity that will always remain in demand, and this realization drives the desire to buy rental properties. In Southern California, you may be looking at multi-family properties as a way to invest in real estate and wondering if it’s the right move for you.
What are the benefits of buying a multi-family property? What kind of financing is available? Keep reading to find out.
Benefits of a Multi-Family Property
Investing in a multi-home property in California offers numerous benefits. These are some of the reasons this type of property is a top choice for investors:
Rental Demand
Southern California is filled with growing areas that represent a strong demand for rental homes. These urban areas, along with many smaller cities and towns, experience high rental demand due to several factors:
- High Cost of Single-Family Homes: The high cost of single-family homes makes renting a duplex or similar unit a more viable option for many residents.
- Growing Population: California’s population continues to grow, driven by its thriving economy and desirable living conditions.
- Job Opportunities: The state’s diverse economy, encompassing technology, entertainment, agriculture, and tourism, attracts a steady influx of job seekers, increasing the demand for rental properties.
Cash Flow Potential
Multi-home properties can generate significant cash flow, especially in high-demand rental markets. By renting out multiple units, investors can benefit from:
- Multiple Income Streams: Each unit provides a separate source of rental income, reducing the risk associated with vacancies.
- Economies of Scale: Operating costs per unit can be lower compared to single-family rentals, as maintenance, management, and other expenses are spread across multiple units.
Tax Advantages
Investing in real estate comes with various tax benefits, including:
- Depreciation Deductions: Investors can deduct depreciation on the property, reducing taxable income.
- Interest Deductions: Mortgage interest on investment properties is typically tax-deductible.
- Operating Expenses: Expenses such as property management fees, repairs, and utilities can be deducted from rental income.
These benefits are only maximized when you own multiple units.
Financing for a Multi-Family Property
There are a few ways you can go about financing your multi-family property. One of our favorite solutions is the stated income loan. We offer them both for personal residences and investment properties, including rental properties with up to 4 units.
A stated income loan is a type of mortgage loan that allows borrowers to qualify based on the income they report, rather than through traditional income verification methods such as tax returns, W-2s, or pay stubs. This type of loan is particularly beneficial for self-employed individuals, freelancers, or investors with non-traditional income sources.
Not all lenders offer stated income loans, but we’re experts in them. By understanding the features and requirements of stated income loans and preparing adequately, you can leverage this financial tool to secure a profitable real estate investment within a multi-family property in California’s dynamic market. With careful planning and management, a multi-home property can provide both immediate income and long-term financial growth which can help contribute to generational wealth.
Want to learn more about using a stated income loan to invest in a multi-home property? Jackie Barikhan says, “As a lender with decades of experience in the industry, we know how to find creative financing solutions for our clients to help them reach their goals in real estate. We think you’ll be surprised just how much we can help.” Reach out to us any time to learn more!
