Many investors are wondering if there is any truth to the stories of millionaires living the good life off of the passive cash flow from their real estate investment properties. You may have heard statistics mentioning that 80% of millionaires are passive investors who can attribute their wealth to real estate. This likely derives from Andrew Carnegie’s early conjecture that “90% of all millionaires become so through owning real estate.” [6]

The truth is there are plenty of reasons why wealthy people put their money into multifamily real estate investments. Those tired of the unpredictable nature of marketable securities may gravitate toward more reliable options. We are here to discuss why you might want to put passive investing—specifically multifamily real estate—on your radar.

WHY THE RICH PUT THEIR MONEY INTO APARTMENT COMMUNITIES

There are several reasons why wealthy individuals and institutions choose to invest their money in apartment communities.

First, apartment communities can provide a steady stream of rental income, which can be especially attractive to those looking for stable, long-term investments.

The rental income can be reliable and consistent if the units are occupied. Because multifamily properties have plenty of units, investors don’t usually have to worry about one or two units becoming vacant, depending on the property size. The property can still produce a steady cash flow, often making it an ideal alternative choice for anyone who wants to become a passive investor.

Investing in apartments can also be a way to diversify one’s investment portfolio. This is because real estate tends to perform differently than other asset classes, such as marketable securities. By investing in real estate, investors can spread their risk across different types of assets.

Real estate investments even offer several tax benefits, such as depreciation.

Compared to other investment vehicles, multifamily investing gives you a certain level of control while you are creating generational wealth. You can make decisions on how the property is managed. Through upgrades and improvements, you can even potentially increase its value. This means you can directly influence the investment results. [1]

Investing in apartment buildings can provide wealthy individuals with a combination of steady income, appreciation potential, and diversification, making it an attractive option for those looking to grow their wealth over the long term.

1. RISING DEMAND FOR HOUSING

People always need a place to live. With that in mind, multifamily investing can be even more lucrative due to the rising demand for housing.

The demand for housing usually fluctuates based on various economic factors like changes in employment rates, interest rates, and income levels. For example, low interest rates make it more affordable for people to borrow money to buy a home, which could lead to increased demand for housing as more people can enter the market.

It can also vary depending on the specific location and demographics. Generally speaking, there is a rising demand for housing due to factors like population growth and urbanization.

In addition, the COVID-19 pandemic has also led to changes in housing demand, with many people looking for larger homes or homes with outdoor spaces as they spend more time at home. In contrast, others prefer renting for greater flexibility where they live.

Because there is a growing demand in the housing market, investors can capitalize on this and start investing in multifamily properties like apartment communities.

2. TAX DEPRECIATION BENEFITS OF OWNING REAL ESTATE

One of the key advantages of owning real estate is tax depreciation benefits.

Depreciation is the process by which the value of an asset is gradually reduced over time due to deterioration or obsolescence. It is the incremental loss of an asset’s value due to assumed wear and tear. [2]

For tax purposes, the IRS allows property owners to deduct a portion of the cost of their real estate investment each year as a depreciation expense. For real estate investors, this means they can reduce their tax liability and keep more of the rental income. This is a complex topic with plenty of nuances, but for now, it’s simply essential to understand the tax advantages offered to investors. Tax depreciation benefits are considered one of the leading reasons why people look to build wealth through real estate investing. For more on this topic, watch The BAM Companies founder and CEO Ivan Barratt discuss cost segregation and depreciation benefits. 

3. APPRECIATING VALUE OF THE PROPERTY

Appreciation, in the context of multifamily investing, refers to the increase in the value of a property over time. There are two ways for an asset to appreciate in value. One is through natural appreciation, wherein the value increases due to broader market factors such as inflation, supply and demand shifts, and cap rate compression. The other is forced appreciation when the net operating income (NOI) is increased by property-level improvements such as renovations, operational efficiencies that decrease expenses, and increased rental income. [3]

Appreciation can occur whether you own a commercial multifamily real estate or a residential property.

For multifamily investors, appreciation can provide several benefits. First, it can increase the equity in the property, allowing the investor to borrow against the increased value or sell the property for a profit.

Second, appreciation can lead to higher rental income and property values, resulting in greater cash flow and higher returns on investment.

Finally, appreciation can hedge against inflation, as property values and rental income can rise alongside the general price of goods and services.

Investors can achieve appreciation by making strategic improvements to the property, such as upgrading amenities or enhancing curb appeal, as well as by investing in properties in high-growth markets or areas with strong demand for rental housing.

While appreciation is not guaranteed, multifamily investors can still aim for it by carefully considering market conditions, property-specific factors, and other risks before investing.

MULTIFAMILY VS. SINGLE-FAMILY HOMES

Multifamily homes and single-family homes are two popular types of residential real estate properties that are distinct in terms of their size, structure, and the lifestyle they offer.

The main difference lies in the size and structure of the property. As the name suggests, single-family homes are standalone properties with a single unit. On the other hand, multifamily homes have more than one unit within the same building or community.

This means that multifamily homes can accommodate more people and offer more living space. Examples of multifamily real estate properties are duplexes, triplexes, fourplexes, apartment communities, and condominiums.

Multifamily homes are generally considered an optimal investment because they historically generate more rental income than single-family homes. In addition, multifamily homes offer the potential for economies of scale, as maintenance and operational costs can be spread across multiple units.

When it comes to maintenance, multifamily real estate properties are naturally more challenging. However, since investors will most likely work with a property manager, maintaining a single-family may be more burdensome, as investors often handle maintenance themselves to keep costs down. 

Your choice of investment property will ultimately depend on your personal preferences and goals.

HOW TO BUILD WEALTH THROUGH MULTIFAMILY REAL ESTATE INVESTING

Investors looking to build wealth through multifamily real estate investing should know the ins and outs of the industry before getting into it. After all, multifamily properties are larger and will cost more money. For many investors, multifamily real estate investing is a big deal.

Before investing, you must educate yourself about the multifamily real estate market and its trends and regulations. Attend real estate seminars, read books on the subject, and talk to real estate professionals.

Next, you need to determine your investment strategy. Decide on your investment strategy and goals, such as your desired return on investment, cash flow requirements, and investment timeline. Determine what kind of property you will purchase and how to manage it.

Build a team of professionals, including real estate agents, property managers, and accountants, who can help you navigate the multifamily real estate market and provide valuable insights and advice.

Once you finish the planning phase, you can start looking for properties that fit your investment strategy and goals. Conduct thorough due diligence. Make sure you inspect the property and review financial statements so that everything is in order.

Secure financing through a lender or investment partner after choosing your desired multifamily real estate property.

Purchasing the property is only one step in the multifamily investing process. Next, you have to manage it and make sure it is profitable. This will ensure that the property generates the expected return on investment. Most multifamily investors hire a property manager for the property’s day-to-day operations. They will collect rent, handle emergencies, manage residents, and closely monitor the finances.

You must evaluate your investment and continuously adjust your strategy as needed. Monitor market conditions, property performance, and cash flow to ensure you’re on track to meet your goals.

Building wealth through multifamily real estate investing requires patience, diligence, and a long-term perspective. By following these steps and working with a team of professionals, you can set yourself up for success in the multifamily real estate market.

TRY MULTIFAMILY REAL ESTATE PRIVATE PLACEMENT (SYNDICATION)

As you can see, despite the many advantages of multifamily investing, it takes a lot of work to reap its benefits. Some investors may choose single-family investing just because it is easier.

But if you want to pursue multifamily investing while avoiding all the headaches that usually come with it, an alternative investing strategy for you is multifamily private placement (syndication).

Multifamily private placement, or syndication, is usually exclusive to accredited investors, meaning people with a particular net worth, income, or credentials.

Multifamily syndication involves pooling your resources with multiple investors to invest. This allows you to participate in large real estate deals with a lower capital commitment than would typically be required. [4]

It is usually too risky to take on such a large project alone. But thanks to multifamily syndication, you can enjoy all the benefits of owning an apartment building without actually having to buy it yourself.

A sponsor, or syndicator, puts the deal together and looks for investors who will provide a portion of the capital needed to purchase the property. These deals are usually structured as a limited liability company (LLC) or a limited partnership (LP). [4]

While a syndication deal can be done with any type of real estate, multifamily properties are the most popular because of their potential for strong cash flow, strong demand, appreciation potential, and scalability.

Multifamily properties are known for generating a steady flow of income through rent. The passive investors can receive cash flow distributions throughout the hold period of the investment and a share of the capital appreciation upon resale.

Because the syndicator is also in charge of property management, investors do not have to worry about taking on the landlord role. This makes it a truly passive investment.

WHY ACCREDITED INVESTORS CHOOSE BAM CAPITAL FOR MULTIFAMILY SYNDICATION 

Multifamily private placement (syndication) can be a great source of passive income, capital appreciation, or both, and the best part is that it does not take as much work as purchasing an apartment community by yourself. You still need to do some due diligence when choosing a syndicator to work with, but most of the work is done once you have selected a syndicator you trust.

To fully enjoy the benefits of multifamily syndication, you must work with a trustworthy syndicator.

BAM Capital has a strong Midwest focus, prioritizing Class A properties with in-place cash flow and proven upside potential. Their goal is to help accredited investors grow their wealth through multifamily syndication. [5]

BAM Capital prioritizes accredited investors who want to enjoy passive income and all the other benefits of multifamily private placement. As the private equity arm of The BAM Companies, BAM Capital has been focusing on buying the most profitable assets and staying disciplined in its investment thesis. BAM Capital’s investment strategy aims to create forced appreciation while mitigating investor risk. To date, the brand has successfully managed over $1.7 billion in assets across ~9,000 apartment units. [5]

For accredited investors who want to enjoy passive income and all the other benefits of being in multifamily syndication, look no further than BAM Capital. Schedule a call with BAM Capital and invest today.

Remember that no investment is without risk. Before making financial decisions, consult your investment advisor and schedule a call with a BAM Capital investment team member.

Disclaimer: All investments carry risk, including potential loss of capital. This content is for informational purposes only and is not financial, legal, or investment advice, nor an offer or solicitation to buy or sell any security. Consult an independent advisor for personalized guidance and contact BAM Capital for details on current offerings. BAM Capital and its representatives are not fiduciaries or investment advisors. The information provided is general and may not reflect individual financial goals. Any financial terms, projections, or forward-looking statements contained herein are hypothetical in nature and should not be interpreted as guarantees of future performance or safety. Such statements reflect Bam Capital’s opinion and are subject to market fluctuations, economic conditions, and investment risks. Past performance does not predict future results. BAM Capital and its affiliates do not guarantee the accuracy or completeness of this information. Bam Capital offers investment opportunities under Rule 506(c) of Regulation D exclusively for accredited investors as defined by the SEC. Verification of accredited investor status is required prior to participating in any investment.

© 2025 Bam Capital. All rights reserved.

SOURCES:

[1]: Investopedia. (2024). “What Is the Equity Multiplier?” https://www.investopedia.com/terms/e/equitymultiplier.asp

[2]: Wall Street Prep. (2023). “Equity Multiplier.” https://www.wallstreetprep.com/knowledge/equity-multiplier/

[3]: Cadre. (n.d.). “How to use equity multiple to evaluate real estate investments.” https://cadre.com/insights/how-to-use-equity-multiple-to-evaluate-real-estate-investments/

[4]: MasterClass. (2021). “Understanding a Real Estate Syndication Deal.” https://www.masterclass.com/articles/syndication-deal-explained

[5]: BAM Capital. (n.d.). “Current Portfolio.” https://capital.thebamcompanies.com/ 

[6]: RedOak Development Group. (2022). “Top 7 Reasons Why 90% of US Millionaires Invest In Real Estate & Why You Should Follow the Lead.” https://redoakvc.com/top-7-reasons-why-90-of-us-millionaires-invest-in-real-estate-why-you-should-follow-the-lead/