Next in our 101 series is a topic that’s near and dear to our hearts: Multi-Family Investing.
We’ve built a portfolio of 90 buildings and 450 units—so trust us when we say, we’ve seen The Good, The Bad, and The Ugly. Whether you’re looking to dip your toes into real estate or take the plunge into long-term investing, multi-family properties offer serious potential.
Let’s break down the basics.
âś… Why Invest in Multi-Family Real Estate?
1. Tax Benefits
You can take advantage of:
- Depreciation
- Write-offs
- Losses
- Long-term capital gains
(Always consult your CPA, of course!)
2. Passive Income Potential
Multifamily = Monthly Residual Income.
There’s nothing quite like getting paid every month just for owning smart investments.
3. Retirement Cash Flow
Once your mortgage is paid off, you’re left with income minus expenses—creating:
- Long-term retirement cash flow, or
- A lump sum nest egg if you decide to sell
4. Real-World Experience
Owning a small multi-family building gives you hands-on landlord experience—without fully committing to a massive portfolio. It’s a great way to test the waters and decide if being a landlord is right for you.
⚠️ The Not-So-Glamorous Side (The Cons)
Let’s keep it real: being a landlord isn’t easy.
1. Landlord-Tenant Laws
In states like Massachusetts and Rhode Island, tenant-friendly legislation can make things difficult for landlords.
Examples include:
- Rent control proposals
- Eviction sealing
- “Tenant first” right of refusal laws
- Free legal representation for tenants—none for landlords
2. Tenant Troubles
Tenants can:
- Stop paying rent
- Trash your unit
- Bring problematic guests
- Then call the Board of Health on you (and yes, you still have to fix it)
These situations can destroy property value and cash flow. Evictions and turnovers aren’t just stressful—they’re expensive.
3. Active Management Required
Small multi-families—especially in less desirable areas—are not hands-off investments. You’ll need:
- Strong leases
- Solid property management
- Regular maintenance
- A consistent presence at the building
If you want a “hands-off” investment, be prepared to pay more and accept a lower return.
đź“Š How to Make It Work: Run the Numbers
We can’t stress this enough:
Run the numbers. Then run them again.
Look at:
- Cash flow (before and after renovation/stabilization)
- Appreciation potential
Never buy based solely on speculation. Buy properties that:
- Cash flow now, or
- Will cash flow after you fix the tenant mix, complete renos, or stabilize the building
Appreciation is the cherry on top—not the sundae.
🧠Final Word: Start Smart, Scale Smarter
Multi-family investing is a powerful wealth-building strategy—but it’s not for everyone. Start with the basics, test your comfort level, and build from there.