The “equity bump” you get when you build new construction multi-family helps you build equity (and wealth) very quickly in the first couple years of ownership.
There are a lot of reasons why building new construction multi-family properties is much more attractive than buying older properties and my new Book:
Don’t Buy Multi-Family! BUILD IT
goes into all of that, but I think a lot of multi family investors are very focused on cash flow numbers and might not understand how important it is to also look at the equity side of the equation.
So let’s look at a quick example from the book: Here we’ll look at the numbers for a new 4 story building with 3 ~ 1700sf 3 bedroom apartments over a smaller commercial storefront unit.
First we’ll look at the cash flow numbers for the finished project and then we’ll look at the equity position and projected sales returns.
This is where we examine the new construction equity bump that in this example helps us increase our equity by 70% after just the first year of operation!
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