Tag Archives: multifamily investing

Market Insights

Why Rising Incomes May Be the Most Underrated Tailwind for Multifamily Investors

Posted on by Jaiden Andus
Rising Incomes Multifamily Investors

Rising Incomes Multifamily Investors Shouldn’t Ignore

For much of the post-pandemic period, rent growth outpaced income growth, putting pressure on renters and introducing new risks for multifamily operators. Today, that dynamic is beginning to shift—and it may be an under-appreciated positive for long-term investors.

According to Zillow, nationwide rent growth slowed to 2.3% year-over-year in October, while median household incomes are estimated to have risen roughly 4%. GlobeSt notes this marks a reversal from the pandemic-era trend, when rents consistently climbed faster than wages and strained household budgets.

Affordability Is Stabilizing—Not Resetting

Despite the slowdown, affordability hasn’t returned to pre-COVID levels. The typical U.S. rent now stands at $1,949, up 35.6% from before the pandemic—well above the 26% rise in overall inflation. As a result, renters now spend about 27.2% of median income on rent, compared to 26.3% pre-pandemic.

Still, the direction matters. Incomes are finally catching up, helping stabilize renter balance sheets after years of compression.

Markets Where Renters Are Gaining Ground

Affordability improvements are most evident in markets where rents are declining. Austin, Denver, San Antonio, and Phoenix have all posted year-over-year rent decreases between 0.7% and 3.1%, while incomes continue to rise. Even in higher-cost markets like San Jose, stronger wage growth is helping renters keep pace despite ongoing rent increases.

These conditions are creating a more sustainable operating environment for well-located multifamily assets.

Where Pressure Remains

In 12 of the 50 largest U.S. metros, rents are still growing faster than incomes. This includes high-cost coastal markets such as New York and San Francisco, as well as Midwest cities like Chicago, Cleveland, and Milwaukee. In these areas, affordability remains strained—underscoring the importance of market and submarket selection.

Why This Shift Matters to Investors

Improving affordability doesn’t just benefit renters—it strengthens asset performance. When residents have more income left after paying rent, investors often see:

  • Lower delinquency and bad debt
  • Reduced turnover
  • More predictable cash flow
  • Greater operating stability

In many cases, modest rent growth paired with rising incomes produces better risk-adjusted returns than aggressive rent increases that stress tenants.

Looking Ahead

With additional multifamily supply delivering in many markets, rent growth may remain muted in the near term. While affordability challenges will persist in high-cost and slow-growth metros, the narrowing gap between rents and incomes suggests the sector is entering a more balanced phase.

For long-term multifamily investors, this quieter shift toward stability may prove to be one of the most important tailwinds of the next cycle.

When You’re Ready… Here’s 3 Ways We Can Help:

  1. Connect With Our Team: Whether you’re exploring passive real estate for the first time or you’re a seasoned investor looking for a trusted partner, our team is available to answer your questions. Schedule a confidential strategy call to learn more about our investment philosophy, current opportunities, and how we help investors achieve income, growth, and tax efficiency. 
  2. Join Our Private Investor Portal: Gain exclusive access to our current offerings and ongoing pipeline of multifamily investments. Inside, you’ll find detailed financials, market insights, and structured deal overviews—all designed to help you make informed, confident decisions about where to place your capital.
  3. Review Our Investment Strategy: Get a clear understanding of how we source, underwrite, and manage multifamily assets. Our strategy is built around long-term wealth creation, consistent passive income, and disciplined risk management. Learn what sets us apart and why sophisticated investors choose to partner with us.
Multifamily Market Outlook

Multifamily Market Outlook 2026: Where Opportunity Emerges as the Cycle Stabilizes

Posted on by Jaiden Andus
Multifamily Market Outlook 2026

Multifamily Market Outlook 2026: A New Set of Opportunities Emerges

As 2025 comes to a close, the U.S. multifamily market is transitioning from a period of disruption to one of stabilization. After several years marked by inflation, rising interest rates, and an unprecedented wave of new supply, the sector is beginning to find firmer footing. While the past year did not deliver outsized growth, it clarified where risk now lies—and where opportunity is emerging.

Looking ahead to 2026, returns will be driven less by broad market momentum and more by disciplined execution, local market selection, and alignment with experienced operating partners.

2025 Recap: Stability Returns as Supply Peaks

Operating Fundamentals Remained Intact

National rent growth in 2025 averaged approximately 2%–3%, modest by historical standards but notable given the scale of new supply delivered. Vacancy rates remained elevated, reaching roughly 7% nationally late in the year, driven largely by the tail end of a construction cycle that added hundreds of thousands of units—particularly in the Sun Belt and Mountain West.

Importantly, renter demand held steady. Employment growth, demographic tailwinds from Gen Z and Millennials, and continued barriers to homeownership supported absorption throughout the year.

Development Slowed Meaningfully

While deliveries remained high, new construction starts and permits declined sharply. Higher borrowing costs, elevated construction expenses, and more conservative rent assumptions made fewer projects feasible. As a result, the active development pipeline has contracted significantly—setting up a more balanced supply environment over the next several years.

Capital Markets Began to Reopen

Multifamily transaction activity rebounded in 2025, with annual sales volumes projected in the $370–$380 billion range. Cap rates stabilized, price discovery improved, and agency lenders continued to provide liquidity as banks and CMBS lenders remained selective.

Private capital—family offices, high-net-worth investors, and experienced operators—accounted for a large share of acquisitions, while many institutional investors remained cautious.

2026 Outlook: Gradual Improvement, Not a Surge

Most forecasts point to 2026 as a year of incremental recovery rather than rapid expansion.

New apartment deliveries are expected to decline sharply from recent peaks, easing competitive pressures in many markets. Vacancy is projected to trend modestly lower, while rent growth becomes more consistent across regions and asset types. Markets with heavy recent construction may still take time to fully absorb supply, but overall conditions are improving.

On the financing side, liquidity should increase gradually. Higher agency lending caps and the potential for lower interest rates later in the cycle may support refinancing activity and transaction volume, though underwriting discipline is likely to remain firm.

Why Market Selection and Execution Matter More Now

In a slower-growth environment, outcomes are increasingly determined at the asset and submarket level.

Markets with Future Growth, Not Past Momentum

The most attractive opportunities are in markets where population, employment, and business growth are forming—but where housing supply is no longer accelerating. These are often secondary or tertiary markets, or specific submarkets within larger metros, where long-term fundamentals remain favorable and new construction is moderating.

Existing Assets with Operational Upside

As development slows, existing multifamily properties—particularly those that underperformed during the recent supply surge—offer potential for improvement through better management, targeted capital investment, and normalized leasing conditions. Returns are more likely to come from execution and cash flow growth than from multiple expansion.

The Importance of the Right Partners

With narrower margins and greater dispersion in performance, experience matters. Local market knowledge, conservative underwriting, and alignment of interests are increasingly important as investors navigate this phase of the cycle.

Looking Ahead

The multifamily sector is moving from a supply-driven pause toward a more balanced environment. Demographic demand remains durable, development pipelines are shrinking, and capital markets are stabilizing.

While challenges remain, the outlook for 2026 is cautiously constructive. Investors who focus on well-located assets, markets with long-term growth drivers, and experienced operating partners are likely to be best positioned as the cycle continues to normalize.

When You’re Ready… Here’s 3 Ways We Can Help:

  1. Connect With Our Team: Whether you’re exploring passive real estate for the first time or you’re a seasoned investor looking for a trusted partner, our team is available to answer your questions. Schedule a confidential strategy call to learn more about our investment philosophy, current opportunities, and how we help investors achieve income, growth, and tax efficiency. 
  2. Join Our Private Investor Portal: Gain exclusive access to our current offerings and ongoing pipeline of multifamily investments. Inside, you’ll find detailed financials, market insights, and structured deal overviews—all designed to help you make informed, confident decisions about where to place your capital.
  3. Review Our Investment Strategy: Get a clear understanding of how we source, underwrite, and manage multifamily assets. Our strategy is built around long-term wealth creation, consistent passive income, and disciplined risk management. Learn what sets us apart and why sophisticated investors choose to partner with us.
Real Estate Investing

As Homebuyers Hesitate, Multifamily Investors Win

Posted on by Jaiden Andus
Multifamily investors

Builder sentiment in the single-family home market showed only a modest improvement in November, signaling a market that remains fragile. The NAHB/Wells Fargo Housing Market Index (HMI) edged up by a single point to 38, reflecting cautious optimism as affordability challenges persist despite slightly lower mortgage rates.

Economic uncertainty continues to weigh heavily on potential buyers. Recent macroeconomic factors—including a historically long government shutdown, persistent inflation concerns, and a softer labor market—are keeping many prospective homeowners on the sidelines. According to NAHB Chairman Buddy Hughes, “Buyers are still hesitant despite lower mortgage rates. Builders are leaning more on incentives, like price cuts, to close deals—but many shoppers remain cautious.”

Price adjustments and incentives have become increasingly common. In November, 41% of builders reported reducing prices—the highest share since the post-COVID period began—with average reductions around 6%. Overall, 65% of builders offered some form of sales incentive to encourage buyers. While such strategies provide short-term momentum, they underscore the ongoing challenges on the demand side.

Breaking down the HMI components:

  • Current sales conditions rose slightly to 41
  • Future sales expectations fell to 51
  • Prospective buyer traffic inched up to 26

All three metrics remain at or just above neutral, with buyer traffic continuing to lag. Regional differences suggest a slightly more optimistic outlook in the Northeast and South, whereas the Midwest and West are seeing weaker activity.

Implications for Multifamily Investors

The hesitation among single-family home buyers has a direct ripple effect on the multifamily rental market. When buyers delay home purchases due to affordability pressures or economic uncertainty, they often remain renters longer. This extended renting cycle can benefit multifamily investors in several ways:

  1. Sustained Rental Demand – With fewer first-time buyers entering the market, occupancy rates in multifamily properties are likely to remain stable or even increase in some markets. This is particularly true in regions where housing affordability is most constrained, as renters have limited alternatives.
  2. Potential for Rent Growth – Stronger demand allows landlords to maintain or modestly increase rents, especially in well-located, quality properties. Even as single-family homes offer price cuts and incentives, many prospective buyers may still find renting more feasible in the short term.
  3. Reduced Volatility Compared to Single-Family Markets – While single-family construction slows in response to weak buyer traffic, multifamily developments tend to be less sensitive to short-term fluctuations. Investors in stabilized multifamily assets may therefore experience more predictable cash flow during periods of single-family market uncertainty.
  4. Opportunities in Select Markets – Regional variations in buyer activity can influence where multifamily demand is strongest. For example, areas in the Northeast and South where buyer confidence is slightly higher may see slower rental demand growth, whereas the Midwest and West could benefit from stronger renter retention as prospective buyers remain on the sidelines.
  5. Long-Term Tailwinds – Even as mortgage rates decrease and the single-family market eventually recovers, multifamily investors may continue to see benefits from structural housing affordability challenges. Rising home prices, stricter lending standards, and ongoing economic uncertainty all contribute to a pool of renters that supports multifamily occupancy and income stability.

In short, hesitation in the single-family market reinforces the role of multifamily housing as a reliable investment for multifamily investors. While economic uncertainty and inflationary pressures impact all real estate sectors, multifamily properties positioned in markets with strong rental demand and limited supply are well-positioned to benefit from sustained renter activity in the near term.

When You’re Ready… Here’s 3 Ways We Can Help:

  1. Connect With Our Team: Whether you’re exploring passive real estate for the first time or you’re a seasoned investor looking for a trusted partner, our team is available to answer your questions. Schedule a confidential strategy call to learn more about our investment philosophy, current opportunities, and how we help investors achieve income, growth, and tax efficiency. 
  2. Join Our Private Investor Portal: Gain exclusive access to our current offerings and ongoing pipeline of multifamily investments. Inside, you’ll find detailed financials, market insights, and structured deal overviews—all designed to help you make informed, confident decisions about where to place your capital.
  3. Review Our Investment Strategy: Get a clear understanding of how we source, underwrite, and manage multifamily assets. Our strategy is built around long-term wealth creation, consistent passive income, and disciplined risk management. Learn what sets us apart and why sophisticated investors choose to partner with us.
Market Insights

Commercial Real Estate: The Quiet Momentum Driving CRE Deals in 2026

Posted on by Jaiden Andus
Commercial real estate

For nearly two years, commercial real estate has lived in a fog of uncertainty. Elevated rates, inflation pressure, and valuation resets kept many investors watching from the sidelines. But as we close out 2025, the data is no longer ambiguous: the CRE market has regained its footing, and the setup for 2026 is the strongest we’ve seen since before the pandemic.

Below is what today’s numbers really say and what it means for accredited investors focused on multifamily.

The Capital Markets Are Waking Up

Three forces: lower rates, improving fundamentals, and surging refinancing activity are reshaping the landscape:

  • Loan originations jumped 48% YoY through Q3 to $587B, up from $395B in 2024.
  • Refis now make up 55% of all originations, unlocking transaction flow that had been frozen since 2022.
  • Bank lending is up 85%, CMBS issuance is up 37%, and insurance/agency lenders have expanded 29% and 41%.

This isn’t theoretical optimism, this is capital deployment at scale. When lenders return, transactions follow. And that’s exactly what we’re seeing.

Sales Activity Is Rebounding…Quietly but Powerfully

Investment sales climbed 19% YoY through Q3 to $350B, with two-thirds of transactions under $100M prime territory for sophisticated private investors.

Meanwhile:

  • 70% of properties sold in September traded above their prior purchase price, with an average gain of $10.2M.
  • Assets bought for $60–75M in 2018–2019 are now exiting at $90–100M.

While media headlines focus on distress, the transactional reality tells a very different story: appreciation is happening right now.

Multifamily Remains Best-in-Class

Despite pricing tightness and pockets of oversupply, multifamily still leads all property types with $42B in Q3 volume (up 10% YoY).

Why? Because the fundamentals—household formation, rent demand, affordability gaps, and migration patterns—remain structurally strong. Even in uncertain macro conditions, people still need housing.

Meanwhile:

  • Office and retail, the sectors many wrote off, are actually leading the rebound with sales up 25–29%.
  • Institutional buyers are reentering office in major markets, rising from 9% of acquisition volume in 2023 to nearly 40% in 2025.

The recovery is broader and more durable than expected.

A Recovery Rooted in Operations, Not Hype

Unlike past cycles driven by cap-rate compression or cheap debt, this one is powered by operational performance:

  • Renewed leasing momentum.
  • Stronger rent collections.
  • Stabilizing occupancy.
  • Better reporting and asset-level discipline.
  • Technology and AI reshaping underwriting, asset management, and deal sourcing.

In many ways, 2026 is poised to reward execution, not speculation.

What’s Fueling 2026 Momentum

1. Rates Are Declining And Confidence Is Rising

Two consecutive Fed cuts (down to 3.75–4%) haven’t transformed the market overnight, but they have created psychological momentum. Every 25–50 bps of relief improves refinancing math, cap stacks, and buyer confidence.

2. Debt Maturities Are Creating Forced Opportunities

The 2025–2027 maturity wave is massive. Many owners who held through high-rate environments will be forced to refi or sell, creating targeted opportunities for well-capitalized sponsors.

3. The Pricing Reset Already Happened

Most of the value correction occurred in 2023–2024. Investors waiting for “the bottom” may have already missed it. As CBRE forecasts 16–17% transaction growth by year-end, with double-digit gains throughout 2026, the early-mover advantage is fading.

4. Technology Is Separating Winners From Everyone Else

Big data, AI-enhanced underwriting, and integrated platforms are no longer competitive edges, they’re necessities. The groups deploying technology effectively are securing deals others never see.

What This Means for Accredited Investors

For accredited investors, the current environment offers a rare opening. Multifamily remains one of the most resilient asset classes, supported by strong demand, steady rent fundamentals, and long-term demographic tailwinds. Even with elevated rates, housing continues to outperform most sectors.

At the same time, the rebound in capital markets means more attractive deals are emerging, especially in the sub-$100M range where private investors have a clear advantage. Many of these opportunities are off-market or relationship-driven, favoring investors aligned with experienced, well-capitalized operators.

Success in this phase of the cycle will come from preparation and execution. Investors who partner with sponsors that have strong lender relationships, disciplined asset management, and access to early-stage deal flow will be positioned to capture outsized returns as the market continues to thaw.

The Bottom Line

Commercial real estate isn’t waiting for a comeback, it’s already shifting. Transaction activity is rising, confidence is returning, and multifamily fundamentals remain solid as we move toward 2026.

This moment offers meaningful asymmetry: uncertainty keeps some buyers on the sidelines, yet the underlying fundamentals support future upside. That gap won’t last forever. As more capital re-enters the market, competition and pricing will tighten.

For accredited investors, the next 12–18 months may be one of the most favorable windows of the cycle. Those who position capital now, before the recovery becomes obvious, will be best positioned to benefit from the momentum already forming beneath the surface.

When You’re Ready… Here’s 3 Ways We Can Help:

  1. Connect With Our Team: Whether you’re exploring passive real estate for the first time or you’re a seasoned investor looking for a trusted partner, our team is available to answer your questions. Schedule a confidential strategy call to learn more about our investment philosophy, current opportunities, and how we help investors achieve income, growth, and tax efficiency. 
  2. Join Our Private Investor Portal: Gain exclusive access to our current offerings and ongoing pipeline of multifamily investments. Inside, you’ll find detailed financials, market insights, and structured deal overviews—all designed to help you make informed, confident decisions about where to place your capital.
  3. Review Our Investment Strategy: Get a clear understanding of how we source, underwrite, and manage multifamily assets. Our strategy is built around long-term wealth creation, consistent passive income, and disciplined risk management. Learn what sets us apart and why sophisticated investors choose to partner with us.
Market Insights

Fannie Mae Multifamily Inspections: Why Oversight Is Increasing Nationwide

Posted on by Jaiden Andus
Fannie Mae multifamily inspections

GSE inspections are ramping up nationwide and the reason may go deeper than most think.

If you own or asset-manage multifamily properties financed through Fannie Mae, you may have noticed something unusual lately, unannounced inspections and even requests for new Property Condition Assessments (PCAs).

You’re not imagining it. This trend is spreading across portfolios nationwide, and it’s catching many operators off guard. The question is why now?

A Quick Refresher: What Is a GSE?

Fannie Mae (along with Freddie Mac) is a Government-Sponsored Enterprise (GSE) a federally chartered organization created to stabilize and support the U.S. housing market.

Rather than lending directly, GSEs buy and securitize loans from lenders, guaranteeing those mortgage-backed securities (MBS). That guarantee comes with strings attached strict standards, ongoing oversight, and compliance with the Multifamily Selling & Servicing Guide.

Why the Surprise Inspections and PCA Demands?

Over the past year, Fannie Mae has tightened its operational oversight. Several factors are driving the increased activity:

1. A Tougher Market and Rising Credit Risk

With interest rates at multi-decade highs, rent growth slowing, and delinquencies inching upward, Fannie Mae is taking a harder look at collateral quality. These inspections identify deferred maintenance or early signs of distress before losses occur.

2. Recent Guide Updates and Stricter Enforcement

Fannie Mae’s updated PCA guidance now classifies more items as “immediate repairs” from obsolete electrical systems to life-safety deficiencies. The message: compliance delays are no longer acceptable.

3. Deferred Maintenance in Older Assets

Many Class B and C communities are showing age. Deferred CapEx that built up post-COVID has become impossible to ignore. Fannie Mae isn’t waiting for defaults to uncover problems it’s proactively visiting assets.

4. Servicers Under Pressure

Servicers, acting on Fannie Mae’s behalf, are required to perform more on-site verifications for watch-list or at-risk loans. The result: more frequent inspections, shorter notice windows, and higher scrutiny.

A Personal Theory: The 2021–2022 Wave of New Operators

Here’s the part few are talking about and it may explain the sudden surge in oversight.

Between 2021 and 2022, multifamily experienced one of the largest influxes of new syndicators and operators in its history. Capital was abundant, rates were low, and value-add plays looked like a sure bet.

According to Newmark, multifamily investment volume hit $353 billion in 2021 and $294 billion in 2022, roughly 75 percent above pre-pandemic norms. That velocity invited first-time sponsors to chase Class B and C deals in fast-growing Sunbelt markets.

Meanwhile, crowdfunding and syndication platforms like CrowdStreet expanded rapidly, reporting billions in equity raised by late 2022. Smaller, newer operators suddenly had access to capital they’d never had before.

Then the cycle turned. Rates doubled. Insurance, payroll, and taxes skyrocketed. Rent growth flattened.

Many of those operators who built underwriting models on aggressive rent premiums and short value-add timelines had to divert CapEx to operations just to keep the lights on. Renovations stalled. Capital reserves evaporated. Assets slid into partial completion limbo.

It’s entirely plausible that Fannie Mae and other GSEs noticed. Their loans were underwritten on the assumption of completed upgrades and adequate reserves. When those improvements didn’t materialize, the physical condition of the collateral inevitably declined.

So while these “unannounced” inspections might feel abrupt, they’re likely a data-driven response to that 2021–2022 operator cohort an industry class that entered at the top of the market cycle and never fully executed its business plans.

Why It Feels Unannounced

Technically, Fannie Mae’s guide requires advance notice before inspections. But in practice, servicers facing higher risk scores are shortening lead times or conducting on-site visits with minimal notice.

To property teams, that feels like a surprise. To the GSE, it’s “enhanced surveillance.”

How Owners and Asset Managers Can Stay Ahead

  1. Review Your Loan Documents. Confirm inspection and PCA rights, some loan riders allow more aggressive timelines.
  2. Document Every Visit. Record date, attendees, and scope to maintain transparency.
  3. Audit Your Own Properties. Catch deferred items before the lender’s report does.
  4. Engage Your Servicer Proactively. Ask if your asset is under broader review or watch-list criteria.
  5. Revisit Reserves and Forecasts. Reclassify “deferred” into “immediate” where necessary and plan funding now.

The Bigger Picture

This isn’t about micromanagement, it’s about risk management. Fannie Mae’s actions reflect the reality of 2025’s market: tightening liquidity, aging assets, and the natural correction following a historic capital surge.

And perhaps, it’s also a marker of a maturing industry. When CapEx gets repurposed for survival, properties age faster and the agencies are watching.

Final Thought

This trend isn’t isolated to one region or asset class it’s a nationwide tightening of standards across GSE-backed multifamily loans.

Whether you manage 200 units or 2,000, now is the time to ensure your documentation, reporting, and property condition are bullet-proof.

Because when the GSE knocks, even unannounced, it’s too late to start cleaning up.

Meaghan Davenport President of Operations, Axxis Capital Helping owners and operators think bigger about performance, compliance, and accountability.

About the Author: Meaghan Davenport is a seasoned asset management executive and multifamily syndicator with a proven track record in operational turnarounds, value creation, and team leadership. Her work focuses on elevating industry standards through transparency, data-driven oversight, and collaboration between ownership, management, and investors.

Sources: Fannie Mae Multifamily Selling & Servicing Guide (2025); Newmark Multifamily Capital Markets Report (2022); CrowdStreet Annual Report (2022); CBRE U.S. Market Outlook (2022).

Real Estate Investing

What the Fed’s Rate Cuts (or Holds) Mean for Multifamily Real Estate Investors

Posted on by Jaiden Andus
Multifamily Real Estate
Multifamily Real Estate

 

For investors with significant capital at work, the question in today’s environment isn’t whether to invest, but where to invest intelligently.

Following the latest Federal Reserve meeting, it’s clear we are in a holding pattern. The Fed chose not to cut rates, instead signaling a cautious stance as inflation moderates and the labor market remains relatively strong. While market participants had hoped for more immediate relief, the message is clear: the Fed is not in a rush, and any future rate cuts will come gradually, likely in late 2025 or beyond.

This decision has broad implications across capital markets, but for those looking to preserve wealth, create passive income, and reduce tax exposure, it also sharpens the spotlight on one specific asset class: multifamily real estate.

High Rates Haven’t Changed the Fundamentals…They’ve Just Changed the Entry Point

Yes, the cost of capital is higher than it was in 2021. But here’s what many investors miss: higher rates have created opportunity, not just friction. During the low-rate years, multifamily assets were heavily bid up, cap rates compressed to unsustainable levels, and buyers were often over-leveraged chasing future rent growth.

That environment has changed. Cap rates have expanded. Buyer competition has cooled. Many owners who financed properties with floating-rate debt are under pressure to exit. This combination of softer pricing and motivated sellers has created a window that experienced operators are beginning to act on.

At the same time, multifamily fundamentals remain solid. Occupancy is strong in most major markets. Rents are holding up, particularly in Class B and workforce housing, where the affordability gap continues to widen. And most importantly, the structural undersupply of housing in the U.S. has not gone away. If anything, it’s become more pronounced. According to recent data, the U.S. still faces a shortage of over 4 million housing units. That demand pressure supports long-term rent growth and asset appreciation, regardless of short-term rate movements.

For High Earners, the Case for Multifamily is Multi-Dimensional

If you’re earning $300,000, $500,000 or even $1M+ annually, you’re likely experiencing a common problem: your income is growing, but your tax liability is growing faster. And while your portfolio may be heavily weighted in stocks, bonds, or high-fee managed funds, few of those assets provide meaningful tax relief or consistent passive income.

This is where multifamily investing offers unique advantages that align directly with the financial priorities of high net worth investors:

  1. Passive Income with Real Assets: Through syndications or direct equity investments, multifamily properties provide monthly or quarterly cash flow backed by real tenants, operating businesses, and appreciating assets. This is income from a tangible source, in markets with persistent housing demand.
  2. Significant Tax Benefits: The U.S. tax code is highly favorable to real estate investors with the recent passing of the “Big Beautiful Bill” back in July. Through bonus depreciation, cost segregation studies, and passive loss offsets, investors can often significantly reduce or even eliminate taxable income from distributions. This is especially compelling for high earners who are otherwise taxed at top marginal rates.
  3. Compounding Wealth Without Active Involvement: Most high-net-worth professionals don’t have the time or interest to become landlords. Multifamily syndications offer the ability to participate in the same equity growth as a principal, without the operational headaches. You benefit from the upside while a professional team handles acquisition, management, renovation, and eventual exit.
  4. Recession-Resilient Asset Class: Multifamily has proven to be one of the most resilient sectors in commercial real estate. During economic downturns, people may downsize from homeownership or luxury apartments, but they still need a place to live. In the past five economic cycles, multifamily has consistently outperformed office and retail, and maintained more stable occupancy and income.

Why This Moment Matters

With rates holding steady and cuts pushed further out, many investors are sitting on the sidelines, waiting for perfect clarity. But the reality is: the best deals rarely come when everyone is confident. They come during transition periods when pricing hasn’t yet caught up to forward-looking fundamentals.

Experienced operators are using this environment to acquire assets at discounted valuations, often with assumable fixed-rate debt or structured seller financing. These are not speculative acquisitions, but carefully underwritten investments that prioritize stabilized cash flow and long-term equity creation.

Additionally, as the debt markets stabilize, we’re seeing improved terms from agency lenders like Fannie Mae and Freddie Mac, especially for deals in strong demographic markets with proven demand. This creates a rare combination: lower acquisition prices, improving debt terms, and resilient operating performance.

For investors focused on preserving and compounding wealth, this is the environment where long-term gains are seeded.

When You’re Ready… Here’s 3 Ways We Can Help:

  1. Connect With Our Team: Whether you’re exploring passive real estate for the first time or you’re a seasoned investor looking for a trusted partner, our team is available to answer your questions. Schedule a confidential strategy call to learn more about our investment philosophy, current opportunities, and how we help investors achieve income, growth, and tax efficiency.
  2. Join Our Private Investor Portal: Gain exclusive access to our current offerings and ongoing pipeline of multifamily investments. Inside, you’ll find detailed financials, market insights, and structured deal overviews—all designed to help you make informed, confident decisions about where to place your capital.
  3. Review Our Investment Strategy: Get a clear understanding of how we source, underwrite, and manage multifamily assets. Our strategy is built around long-term wealth creation, consistent passive income, and disciplined risk management. Learn what sets us apart and why sophisticated investors choose to partner with us.
Tax Benefits

How the ‘Big Beautiful Bill’ Creates Bigger Returns for Real Estate Investors

Posted on by Jaiden Andus
Multifamily Real Estate

Multifamily Real Estate

 

Occasionally, legislation quietly reshapes how wealth is built—and most people miss it. The recent passage of the One Big Beautiful Bill Act (OBBBA) is one of those rare moments. While much of the public conversation focuses on politics, investors should pay attention to what really matters: taxes.

Taxes are often the largest lifetime expense you’ll face, exceeding housing, education, or healthcare. That’s why understanding and leveraging favorable tax policies isn’t optional; it’s essential to creating lasting wealth.

This new bill creates one of the most advantageous tax environments in years, especially for real estate investors. Whether you’re already invested in multifamily syndications or exploring new opportunities, these changes can help you keep more of your earnings, lower your tax burden, and accelerate your path to financial freedom.

When approached strategically, tax efficiency isn’t just an added bonus—it’s a fundamental driver of wealth growth.

Here’s what’s changed and why it matters for your investment strategy:

Lower Tax Rates Are Now Permanent

The 2017 Tax Cuts and Jobs Act (TCJA) introduced reduced tax brackets for individuals, but those reductions were originally set to expire in 2025. Under the new legislation, these rates have now been made permanent.

The key brackets include:

  • 24%, which is where many investors’ passive income lands.
  • 37% as the top rate (instead of reverting to nearly 40%).

Additionally, the standard deduction remains $15,750 for individuals and $31,500 for joint filers, with ongoing inflation adjustments.

What this means for you: The income you receive from K-1s and other passive sources will continue to be taxed at favorable rates, ensuring your after-tax income remains strong and predictable over time. This is a structural win that provides clarity for long-term planning and confidence in the net cash flow you can expect from your investments.

Bonus Depreciation Fully Restored and Made Permanent

Perhaps the most significant change in the bill for real estate investors is the return, and permanence, of 100% bonus depreciation for qualifying commercial real estate assets placed in service after January 19, 2025.

What qualifies?

Systems like HVAC, elevators, tenant improvements, landscaping, and other capital-intensive components. These can now be fully expensed in the year of acquisition, rather than depreciated over 15 to 39 years.

For passive investors: This translates into large paper losses on your K-1s. While these losses don’t impact cash flow, they are extremely valuable in reducing taxable income, either from the same investment or from other passive income sources.

20% Deduction on Rental Income Becomes Permanent

The Qualified Business Income (QBI) deduction, commonly referred to as the 20% pass-through deduction, has now been made permanent under the new legislation. 

Why this matters: For passive investors who are focused on optimizing after-tax yield, this becomes a built-in efficiency that doesn’t require restructuring or complicated strategies. It’s automatic, and it’s permanent.

1031 Exchanges Remain Intact

Despite prior discussions in Congress about eliminating or limiting 1031 exchanges, this bill has left them fully intact.

Investors can continue to sell investment properties and reinvest the proceeds into qualifying properties while deferring capital gains taxes.

Increased SALT Deduction for High-Tax-State Residents

Previously, state and local tax (SALT) deductions were capped at $10,000, which disproportionately impacted investors in high-tax states. OBBBA raises this cap to $40,000 for households with adjusted gross incomes under $500,000.

Capital Gains Tax Rates Remain Favorable

The favorable rates for long-term capital gains, typically 15% or 20% depending on income, remain in place.

Investor takeaway: When you realize gains from the sale of a property after holding it for a year or more, those profits will continue to be taxed at significantly lower rates than ordinary income. 

Real Estate Professionals Maintain Their Full Advantage

If you or your spouse qualify as a Real Estate Professional under IRS rules, you can continue to use passive losses, particularly from bonus depreciation, to offset active income like W-2 wages. For high-income households, this can lead to significant tax deferral or immediate savings. 

Additional Incentives for Affordable Housing and Opportunity Zones

In an effort to support underserved communities and address housing shortages, the bill expands the Low-Income Housing Tax Credit (LIHTC) and enhances benefits tied to Opportunity Zone investments. If you’re considering projects that blend financial returns with social impact, these incentives can improve overall project economics and provide additional federal tax credits.

Faster Federal Permitting for New Developments

The bill also includes a provision to streamline environmental and regulatory approvals for new construction, particularly in multifamily and commercial real estate. This reduces project delays and administrative bottlenecks.

For passive investors: This could translate into faster project starts, shorter construction timelines, and quicker transitions to stabilized income-producing assets.

What You Can Do Today

Taken together, these provisions make long-term real estate investing more attractive, predictable, and rewarding. For investors looking to scale their portfolios without added active work, maximize after-tax returns, and balance capital preservation with income generation, this bill creates a strategic opportunity by aligning tax policy with investment strategy.

  1. Consult with your CPA: Review your tax strategy in light of these changes, especially around depreciation, QBI deductions, and real estate professional status.
  2. Evaluate your current portfolio: Consider how these updates impact your after-tax returns and your capital allocation plans.
  3. Position yourself for upcoming offerings: Properties placed into service in 2025 will qualify for new bonus depreciation rules, timing matters.

Final Thoughts

We’ve always believed that real estate is more than just a way to generate returns, it’s a way to build durable wealth, protect capital, and create time freedom.

This new legislation reinforces that belief. The path ahead is clearer, more tax-efficient, and more aligned with the long-term investor’s goals. And while most will overlook it, those who plan intentionally and invest accordingly will benefit the most.