Within the realm of multifamily real estate investing, there is a wide variety of opportunities for you as an investor, one of them being private equity. If implemented with due diligence it can be a lucrative way to increase your cash flow and expand your overall wealth. But what is private equity and how does it apply to real estate investing? Let’s find out!

What is Private Equity in Real Estate Investing?

Private equity are funds that provide value to investors who are seeking to earn better returns rather than public equity markets, like stocks. Real estate private equity (REPE) is an asset class made up of private investments in commercial real estate property. Rather than individual deals, private equity capital is raised through funds. Through this capital raising from outside investors, firms will:

Conduct Research: The real estate market will be researched with due diligence and will identify potential investment opportunities.

Underwrite Property Financials: The property financials will be reviewed, including expenses and potential return on investment (ROI).

Acquire and Develop: Once a property has been sourced and vetted through due diligence, it is time to acquire the property.

Enhance and Managed: The property will be managed through expertise to ensure it is well-maintained, improved, and generates cash flow.

Selling: Through careful research of the real estate market and when it is the right time, the property can be sold for a ROI.

Some funds are targeted at specific types of assets, whiles other are more flexible and invest in multiple assets. We believe the best category to invest in is commercial real estate: more specifically, in multifamily housing.

Benefits of Private Equity Investment in Multifamily Real Estate

If you are seeking to earn passive income, a private equity real estate firm, such as CF Capital, focuses on acquiring and operating multifamily assets that provide stable cash flow, capital appreciation, and a margin of safety. A private equity multifamily real estate partnership comes with several benefits:

Returns

The biggest benefit of investing in private equity real estate is the returns, specifically passive returns. Especially with multifamily private equity, your investments will increase over time, since it produces income in itself. Multifamily investing generates steady cash flow from rental income, potentially having higher returns in the future and providing diversification benefits. And like all real estate, multifamily investment generally should appreciate over time (and has historically done so), providing the investor with a long-term opportunity.

Tax Benefits

Income that is derived by multifamily investing is generally protected through depreciation, which provides investors with long-term benefits of substantial cash flow and little tax burden. Furthermore, any excess cash flow and appreciation that is not protected by depreciation is taxed at a lower rate than earned income. You’ll want to consult with your CPA on the wide-ranging tax benefits of investing in real estate private equity for your situation, but there are even more meaningful benefits beyond depreciation and lower tax rates that you may be able to take advantage of.

Low Volatility

Every investor's goal is to create the highest return with the least amount of volatility. When the markets are changing, investing in stocks and bonds can be nerve-wracking. Commerical real estate can reduce your portfolio’s overall volatility.

Managed By Experts

Now if you think about it, investing requires a lot of experience and professional care. You have to do research, analyze, acquire, improve, develop, manage, and enhance the property. This can be intimidating, especially if this is your first time. But what if an expert handle all of this for you? Real estate private equity provides this for you.

Why Private Equity in Multifamily Investment?

Multifamily properties play a vital role in the real estate sector and have consistently produced the highest average annual returns of any commercial real estate investment. Adding multifamily real estate to your investment portfolio increases returns, balances market uncertainty, offers tax advantages, and serves as a source of financial freedom. Today, as an accredited investor, you can partner with the highly experienced team at CF Capital to make equity investments in multifamily real estate. For more information, get in touch with CF Capital today.

What is Private Equity in Real Estate?