If you are considering investing in real estate, you should consider multi-family real estate. Anyone who wants an alternative investment to the volatile nature of the stock market should look to real estate and multi-family real estate in particular is probably the smartest choice.
Investing in rental property is fantastic for those who are looking for an additional source of income with the added benefit of a steady appreciation in the value of their portfolio. Single and multi family homes are your main option. Right away, if you understand the concept of not putting all your eggs in one basket, you would assume that multi family homes – usually apartment building with more than one rentable space – are the better option.
There are three main reasons you should opt for triplexes, a few duplexes, lots of single family homes, etc.:
They are a better/safer investment and easier to finance up front
They are easier to deal with since all your properties are in the same place and allow you to more easily diversify your investment portfolio
They just make more sense financially
It is true that the upfront cost of purchasing an apartment building will be much higher than a single-family home. You will sometimes need millions available for that initial payment. However, there is an upside: a multi-family property is more likely to be approved by a bank for a loan than the average home.1
Think about it. If you have a single family home, it could remain vacant for a long time before you find the right family to move in. This is a huge risk; as the home sits vacant, you still have to pay off the loan. Even if you had a tenant, if they couldn’t pay rent anymore, you could lose your profit margin in the time it takes to issue warnings, evict and find a new tenant.
With a multi-family home, it is likely you will always have income coming in from it, even if some units are empty every now and again. This means that a multi-family residence is a much safer investment in the long run and banks can count on getting their loan repaid easier.
If you are trying to build a large portfolio of rental units, multi-family real estate is for you. Why would you purchase 10 separate homes when you could purchase one building with 10 units? The former is much more time-consuming as you would have to work with 10 different sellers, conduct 10 different inspections and deal with 10 different locations. A multi-family home gives you the same benefit for less of a headache.
If you hire a property manager to deal with your rentals, they will be required to:
Handle day-to-day operations
Filling the rental spaces with tenants
Collecting the rent and any other payments
Evict tenants if necessary
Maintain the overall functionality of the property, including repairs, etc.
Property management services allow you to run your investment without having to do much of the day-to-day work. If you only owned a few single family homes, the size of your portfolio and the amount of money you earn each month from your rentals wouldn’t allow you to afford a property manager for each one.
To top it all, with multi-family real estate, “you are competing with fewer real estate investors for the most choice properties than in the single-family home market.”1 Simply put, with multi-family real estate you make more money a month for less work than you would for single-family homes.
articles/personal-finance/ 041216/3-reasons-invest- multifamily-real-estate.asp
We are a husband and wife team, Jason and Lea Bodie. As business owners, we sought a better quality of life when we decided to invest. We now have $1.9 million in single and multi-family real estate assets. We have less stress and more time to spend with our three children than ever before, thanks to our passive income ventures.