When it comes to residential real estate, there are two main types of properties that one can invest in, single-family and multifamily. Here are three reasons to consider investing in multifamily real estate as opposed to single unit rental properties.
More Expensive But A Lot Easier To Finance
At first sight, it might seem as though securing a loan for a single-family property would be a lot easier than trying to raise money for a million dollar complex, but the truth is a multi-family property is more likely to be approved by a bank for a loan than the average home. That’s because multi-family real estate consistently generates a strong cash flow every month. All of this equates to a less risky investment for a lending institution, and can also result in a more competitive interest rate for the landlord.
Growing A Portfolio Takes Less Time
Acquiring a 20 unit apartment building is a lot easier and much more time efficient than purchasing 20 different single-family homes. With the latter option, one would need to work back and forth with 20 different sellers, and conduct inspections on 20 houses that are each located at a different address. Additionally, in some cases, this route would also require an investor to open up 20 separate loans for each property. All of this headache could be avoided by simply purchasing one property with 20 units.
You're In A Position Where Property Management Makes Financial Sense
There are some real estate investors who do not enjoy the actual management of their properties, and instead, hire a property management company to handle the day-to-day operations of their rentals. The amount of money that multi-family properties produce each month give their owners room to take advantage of property management services without the need to significantly cut into their margins.
The Bottom Line
There are many advantages of owning multi-family real estate. These include access to easier and better financing opportunities, the ability to quickly grow one's rental property portfolio and the luxury of hiring a property manager.