Why investing in a multifamily property may be the best decision you make?
Investing in real estate is an efficient way to diversify the portfolio and profit as investors aim to grow their long-term wealth. Investor can choose to invest in retail, industrial, single-family or multi-family homes. In this post, we will discuss the pros of investing in a multi-family property.
1. Necessity- Housing is a basic necessity and everyone needs a place to live. Multifamily occupancy levels, hence stay relatively stable as compared to office or retail properties in the event of an economic distress.
2. Affordability- Multifamily units are more affordable when compared to single family homes. As prices for single-family homes continue to outpace wage increases, they become less affordable. This is particularly true for metro cities like Florida, California and New York that have seen major population increases. Therefore, multifamily is a more affordable alternative.
3. Efficiency- Investors find it more efficient since all the units are located in one place, it is easier to manage the property with respect to leasing and repairs. It is obviously going to be easier to manage 12 properties in one place instead of single units in 12 different places. Not to forget that it is cost-effective as well.
4. Liquidity- Multifamily properties are always in demand with individual and institutional real estate investors alike which gives them a degree of liquidity. Additionally, they tend to sell for higher prices, which helps generate a profit.
5. Reliable cash flow- An investor can count upon multifamily property to generate a steady monthly cash flow from rental payments. The reason for this is that even if one unit ends up becoming vacant, other units will still continue churning out cash flow from other tenants.
6. Easy Finance- Securing a loan is easier because lenders often base their decision upon the property’s potential for making money. Since multifamily properties generate a strong and steady cash flow, it is considered a lower-risk investment.
Suppose the multifamily property has 10 units and 1 goes vacant, the loss in that case only equates to a 10% of the overall occupancy. On the other hand, a vacancy at a single family property leads to a drop in 100% income until a new tenant is found.
7. Faster way to build your portfolio- It is easier to acquire 10 units in a go when purchasing multifamily property as opposed to buying 10 separate single family homes. This also saves the time and resources required to inspect, secure loans for, and work with 10 different brokers and homeowners. Therefore, the investor will quickly build a significant, income-generating real estate portfolio.
8. Demand is high- Multifamily properties for sale are in high demand and the sector is forecast to grow. Rental properties and condos are appealing because they offer updated amenities, higher-quality conditions and added conveniences.
9. Luxury gap is closed- The quality of apartment construction has gotten better. New buildings are made more sustainably and with more entertainment options to cater to modern lifestyle and provide a luxurious customer experience.