Multifamily Properties: An Alternative To Traditional Passive Income Retirement Investing

Real estate can be an effective tool for financing retirement. It provides several advantages over traditional investment vehicles, including financial versatility, which retirees will need when riding off into the sunset. This retirement strategy (which is often referred to as passive income retirement investing) concentrates on acquiring properties for the purpose of generating monthly cash flow, with revenues funding both the investment (mortgage payment) and lifestyle during one’s golden years.

As an investor, passive income retirement investing can be approached in many different ways. The natural tendency of newer investors is to begin small and work their way up. The beginner route for passive income retirement investing has customarily been in the form of rental properties–more specifically, single-family properties. This housing type is standard with retirement investing because it not only offers long-term home appreciation, but residual income as well.

Although lucrative, single-family rentals are not the only option for retirees. An alternative approach to passive income retirement investing is through multifamily properties.

Passive Income Retirement Investing: The Appeal Of Multifamily Properties

Retirement investments real estate

Often referred to as a multi-dwelling unit (MDU), a multifamily apartment building is generally comprised of two single-family homes under one roof. Each unit consist of its own living room, along with a separate kitchen and bathroom. The most common examples of multifamily properties are duplexes, townhouses, condominiums and mixed-use building.

In terms of passive income retirement investing, multifamily properties seek to maximize cash flow opportunities by leveraging several tenants for multiple sources of revenue. The approach is armed with an assortment of opportunities to generate cash flow, but also the versatility for personal housing. With multifamily investments, future retirees have the option to live in one unit while renting out the other (essentially living rent free) or rent both units and earning twice the revenue. Done right, it can be a win-win situation.

For those considering getting started with passive income retirement investing, the following breaks down the appeal of a multifamily investment property, including the attraction it holds for retirement:

Multiple Streams Of Revenues

The hallmark of investing in multifamily properties is cash flow. Compared to single-family property, the appeal of this passive income retirement investing angle is the ability to produce more than one form of income from a single investment. Depending on the number of units, investors have potential to earn a significant margin of profit on a monthly basis. When retirement age comes around, this multifaceted outlet of income will pay for itself (and more) in consistent income.

In addition, because security is of utmost importance in retirement, the advantage of multifamily properties is the option for owner-occupancy. Multiple units equates to multiple investment options, with housing included. Combined with the power still generate income, with the fallback option to live in one of the units, this investing strategy is essentially designed for retirement.

More Value

Valuation is another advantage of multifamily properties. A property is generally valued by a combination of factor, including the amount of income it can produce. If a property has the potential to produce several forms of revenue, it will obviously be valued more another property, helping provide a higher price tag. With multiple units and multiple forms of income, multifamily properties offer retirees more value than traditional retirement investments like single-family rentals. Throw in long-term appreciation and multifamily property investments are essentially designed for retirement.

Location is an important factor to consider when analyzing deals for multifamily properties. Along with dictating rental prices, location probably carries the most weight as it not only serves as an indicator for home values and growth, but potential in rental prices. Last year, the top areas for investment in multifamily properties, included: Sacramento, CA; Salt Lake City, UT; Phoenix, AZ; Jacksonville, FL; and Seattle, WA.

Less Risk

Generally speaking, the days of retirement should be filled with anything other than risk. What makes investing in multifamily properties advantageous from a retirement perspective is the potential to lower your risk levels — both short and long-term. In addition to generating multiple forms of revenue, which is ideal in passive income retirement investing, this option can alleviate the total economic loss for an investor, as the more units a building has, the larger pool of tenants it will attract. Vacancy equates to loss income, and therefore, this option provides a better rate of ensuring that doesn’t happen.

Cheaper To Manage

In terms of retirement, affordability is always be a major consideration. The ability to professionally manage a property at an affordable rate is a serious selling point when it comes passive income retirement investing, as it essentially provides a retiree with less responsibility. A property management company will manage the investment while investors reap the financial passive income benefits that come with it. The general duties and responsibilities of property management will typically include:

  • Setting rental rates
  • Collecting rent
  • Assigning maintenance
  • Marketing/advertising
  • Managing relationships
  • Finding new tenants

A professional management service will allow investors to focus their attention on better things. Along with more financial freedom, a property management service can also provide higher quality tenants, as well as shorten vacancy times, improve processes and provide fewer legal problems.


Versatility is one of the biggest reasons why multifamily properties make sense for retirement. The capability to adjust your source of income at any time, whether saving up for retirement or 10 years deep, is a major advantage for investors. As a up and coming business owner, scalability is another advantage with multifamily properties. This approach not only offer investors the ability to streamline their investment career with the acquisition of multiple properties at one time, but mitigate the common risks when generating monthly income.

Retirement will ultimately mean something different for everyone, but the one thing that remains the same is it will come at a cost. Like anything in life, it won’t be free and if you want it, you’ll have to eventually find a way to afford it. Passive income retirement investing with multifamily properties remains a viable option for retirement, whether just starting out or midway through.

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Real Estate Investing Strategies
Real Estate Investing Strategies
Real Estate Investing Strategies
Real Estate Investing Strategies
Real Estate Investing Strategies
Real Estate Investing Strategies

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