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Definitive Reasons to Invest in Multifamily Real Estate

Pandemic is still there. The stocks are down. Yes, it is not the best time to invest your money. But only few know that real Estate can be an alternative for those who cannot stand the atrocities and outrages of the stock market. It is also an excellent investment for those investors who are eyeing a dynamic process in increasing their capital, instead of passive income by putting their money into a fund which is practically managed by other people. One of the many advantages in real estate investment is that there are an array of techniques in which one can succeed.

Some notable names in real estate investment are Zhang Xin and Donald Bren who built their empire by developing various commercial and residential properties. Some obtain their wealth by obtaining an income-producing portfolio of rental properties. Have you heard of house flipping? Other real Estate investors have made several million dollars by flipping properties. These people buy properties that are in despair for cents on the dollar and remodel them before they sell to a new owner. 

We always have to remember that owning a rental estate can be a fantastic way to broaden your investment portfolio and obtain a steady flow of money. A multifamily investment property can multiply your money with only minimal cost. Multifamily rental properties are basically easy to finance compound returns more quickly and tend to avail of the benefit of economies of scale. 

Real Estate investment is the most excellent way of investing for those people who are eyeing for an added source of income together with a steady increase in their portfolio. When talking about residential real estate, there are two major classification of properties that one can invest in: single-family and multifamily. As the name suggests, single-family properties are residential buildings with only the sole available unit for rental while on the other hand, multifamily properties or more commonly known as apartment units are residential properties that possess more than one unit of rental space. 

Listed below are some benefits to investing in multifamily real estate investment. Here are three major reasons to mull over on why you should choose to invest in such:

  1. Expensive but a lot easier to finance. In the majority of cases, the cost to obtain an apartment building will surely be a lot as compared to a single unit investment. The investment can surely go up to millions. At the onset, you might think that securing a loan from single unit properties would be less tedious than trying to come up with a multifamily property complex, but the truth of the matter is the latter is more likely to be approved easily for loan as compared to the average home.

It is a given fact that multifamily properties generate a steady flow of income on a monthly basis. This is perfectly alright even if the complex has a couple of tenants who are late at their rental payments. Imagine if a tenant from a single-family property moves out, the entire property is practically vacant. No income flow for the next several days, months or so.

Further, a ten-unit apartment, with one or two vacancies would be at most, 20 % vacant. And when we translate it to investment, there is a small probability of a foreclosure. The risk in a single unit investment is very high. All of these will translate into a less risky investment for a lending company. Thus, can even translate in to a more practical interest rate for the owner.\

  1. Enhancing your portfolio will not take you any longer. Multi-family real estate investment is also applicable for property investors who want to create a strong huge portfolio or rental properties. Obtaining a large ten (10) multi-family property is a lot more efficient in terms of application than purchasing ten (10) single-family properties. 

In the latter option, you will be dealing with several sellers and conduct inspections individually. To add, in some scenarios, this choice would also need an investor to open up ten (10) different individual applications for each single-family unit. All of this tedious legworks not to mention the headache, could simply be avoided by leaning towards purchasing a multi-family complex. 

  1. You have control in which Property Management to hire. Granting for argument’s sake that you do not want to manage your own property, hiring a property management company to handle the daily dose of transactions and operations of your rental is the way to go. A property manager usually gets a percentage of the monthly income that a property obtains, and their responsibilities must include screening and looking for tenants, collecting rental payments, handling eviction and ejectment issues, and maintaining the property.

A lot of real estate investors who own a single or two unit single-family property do not have the freedom of hiring an external property manager simply because it is not financially wise because of their small portfolio. The value of money that multi-family properties generate on a monthly basis will surely give the investors a huge room to take advantage of property management services without having to cut their margins.

Bird’s Eye View

Similar to stocks, real estate investment will give you freedom to be successful through an array of different techniques. One of the most famous methods of investing is to own a complex of rental properties. When you want a better type of investment, engage in multi-family real estate investment.