Why You Should Consider Multifamily Investments
Many investors enjoy the returns offered by single family homes and overlook the benefits of investing in multifamily real estate. However, investing in multifamily properties offers its own set of unique benefits. Here are reasons starting multifamily investments might be right for your portfolio in addition to single family investments.
Owning a single family home can be expensive when that structure sits vacant waiting for the right renter to come along. During that time, the mortgage payments fall solely on you and take away from the earnings of your other investments. But if you own a multifamily unit, you still have multiple families to help cover your expenses. The right investment strategy could still cover your mortgage and leave you with cash flow.
2. Less Costly to Maintain
When you have multiple single family properties, you are paying for multiple lawns to mow, multiple roofs to repair and multiple trash collections. A multifamily unit wraps all those expenses under one roof, reducing your per unit expense. In addition to the fact that you are raising your square footage income, you are also giving yourself the ability to serve multiple clients in one location.
3. One Mortgage
If you own multiple single family properties, you can probably recall how much time it took looking at those properties and negotiating a price. Wouldn’t it have been easier if you could have looked at them all at the same time and negotiated one price? You could also have 25 single family properties that required 25 bank loans and 25 closings, or you could have one multifamily real estate that requires one bank loan and one closing. You get the point.
This is perhaps the biggest benefit to investing in multifamily property. Rather than comparing your multifamily home to the comps of other properties, the value of the real estate is based on income. As a result, you can force the appreciation of the property by driving up the net operating income. This leads you to a stronger investment in a shorter amount of time.
If you’ve been hesitant to diversify your portfolio or dip into the unchartered waters of multifamily real estate, you can see there are multiple reasons this investment can actually save you money in addition to increasing our revenue stream. Multifamily investments are sound investments, but whether they are better investments than single family real estate depends on how much work you enjoy putting into your investments.