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May 23, 2024 | read

2023-24 Multi-Family Real Estate: Thriving in Volatility

Thomas Castelli

Navigating the Changing Real Estate Landscape

The Tax Smart REI podcast recently hosted Gino Barbaro, a multifamily investor, business owner, author, and entrepreneur, to discuss his journey and insights into thriving in the multifamily real estate sector during the turbulent year of 2023 and his outlook for 2024.

Gino’s Story: From Pizza Guy to Real Estate Magnate

Gino Barbaro’s journey in real estate began in 2009 when he met Jake, a pharmaceutical rep and his future business partner. From their first multifamily investment in Knoxville, Tennessee, they faced challenges due to a lack of knowledge and credibility. However, after 18 months of persistence, they secured their first deal. Over a decade, they accumulated over 2,200 units and managed assets worth over $350 million, emphasizing the importance of understanding real estate as a business and developing a robust framework for sourcing deals and capital.

Thriving in 2023: Avoiding the Pitfalls of Bridge Financing

2023 was a remarkable year for Gino and his team, despite the challenges faced by many in the multifamily market, including syndicators. They successfully navigated these challenges by avoiding short-term bridge financing and speculative investments, focusing instead on long-term, fixed-rate financing. This strategy paid off, allowing them to grow their portfolio while others struggled with rising interest rates and increased expenses.

Multi-Family Investing in 2024: What to Expect

As we move into 2024, increased opportunities in multifamily real estate are predicted, especially as interest rates potentially lower. Recommended for investors is to always be in “buy mode,” looking for properties that meet their criteria rather than waiting for distressed properties. For those new to multifamily investing, Gino emphasizes the importance of education, choosing a niche, and building relationships with brokers.

Tax Benefits: The Icing on the Real Estate Cake

This episode also delves into the tax benefits of real estate investing. While tax advantages like cost segregation are significant, they should not be the primary reason for an investment decision. Instead, the focus should be on the investment’s intrinsic value and potential returns. Be wary of letting tax savings overshadow the importance of a sound investment strategy.

Corporate Transparency Act: A Potential Challenge

Looking ahead, Gino warns of the implications of the 2024 Corporate Transparency Act, which could impose new reporting requirements on real estate investors. He advises staying informed and seeking legal advice to ensure compliance.

Potential Extension of 100% Bonus Depreciation

An exciting development for real estate investors is the potential extension of 100% bonus depreciation into 2024, and possibly even retroactively to 2023. This change could significantly impact investment strategies by allowing more immediate deductions for property improvements, enhancing the tax advantages of real estate investments.

Conclusion: Prudent Investment in Real Estate

This must-listen episode offers a wealth of knowledge for investors at various levels.

The key takeaways for 2024 are the crucial roles of market understanding, long-term planning, and strategic decision-making in balancing investment opportunities with tax benefits.

Are you interested in multifamily investing strategies? Contact us today.

Listen to this podcast episode below. 
Disclaimer: This podcast summary was partly generated by AI and may contain some errors or miss key points from the audio recording.