MBI EQUITY PARTNERS PROFIT CENTERS

Multifamily properties generate rental income, which provides a steady cash flow stream for investors after expenses are paid. Investors with MBI can expect quarterly cash flow distributions as soon as the property is made profitable, usually within 1 year of investing. 

The ability to use leverage allows investors to control a larger asset with a smaller initial investment, magnifying their return on their invested capital. MBI customizes the debt strategy for each deal to maximize investor equity and expedite the speed with which the asset is made profitable and invested capital is returned. 

Multifamily properties will increase in value through renovations, stabilization (increasing rental income to generate revenue), and market valuation. When an asset is sold, the investors can realize this capital appreciation, increasing their overall return on investment, or reinvest it in another investment to continue receiving cash flow. 

When an asset is sold, the capital appreciation of that asset is subject to income tax. This capital appreciation can be sheltered through a 1031 exchange which reinvests the capital into another larger or more expensive asset. The 1031 exchange will delay income taxes on that property and each following investments until an investor requests that their equity investment be returned. If the investor were to pass away, their heirs would also receive protection from capital taxes in the reassessed value through the illiquidity/minority discount. MBI offers an opportunity to reinvest through a 1031 Exchange for every disposition. 

In every multifamily investment, wear and tear, deterioration, or obsolescence of a property is tracked as depreciation, which reduces the investors’ taxable income. MBI will also assess the impact of a cost segregation for each deal, which accelerates depreciation of the asset providing significant tax benefits in the first year of the investment. 

Mortgage interest, property taxes, and other financing expenses on the investment can be deducted, further reducing taxable income for the investor. Often, interest losses and deprecation deductions are enough to offset all taxes against the investor’s cash flow income, enabling the investor to collect the total cash flow profit.

The deductions and losses generated by real estate investments can sometimes offset other types of income, such as income from a full-time job, a bonus, or investments in stocks and bonds. This can result in a lower overall tax liability for the investor. Multi-family investments may also qualify for the pass-through deduction, which allows investors to deduct up to 20% of their qualified business income from their taxable income. This deduction can apply to income from real estate investments, and can help reduce taxes on other income sources. MBI works directly with investors’ accountants to provide all documentation required to benefit from these advantages.

Real estate is an illiquid asset, meaning that capital invested will be held for a predetermined period of time. MBI on average holds investments for 4 to 7 years. Investing in multifamily provides a hedge against inflation, greater potential for an investment to compound and appreciate, and a “set it and forget it” investment that is actively managed to optimize return. Unlike some other investments, such as stocks or bonds, MBI has more control over the performance of  an investment with decisions regarding property management, renovations, and rental rates that can directly impact the investments’ returns. This compounding effect can be further enhanced by reinvesting cash flow and capital gains into additional properties.