7 Reasons to Consider Investing Multifamily Properties
Real estate investing can be an exciting and lucrative way to grow your wealth and asset portfolio. But if you’re stuck on the fence and aren’t sure what kind of property you want to invest in, here are seven reasons why you should consider investing in multifamily properties.
1. Demand for Apartment Rentals is Rising Steadily
While the economy and housing markets will always experience ups and downs, there is little argument that most people in the country are looking for easier ways to stay on top of their bills. This makes renting an attractive option, as opposed to home ownership.
The number of renters grew twice as fast as the number of owners over the past decade, surpassing the 100 million mark.
2. Cost-Per-Unit Is Lower Than Single Family Homes
Scouting and purchasing a dozen units in a single building is a lot more convenient and more affordable than buying a dozen single family homes spread out around the city – or around the state. The math is simple but accurate.
3. Multifamily Income Properties Provide More Stable Income
One of the biggest reasons to consider investing in multifamily properties is that, dollar for dollar, you are likely to have a much steadier income compared to single family residences or commercial properties.
When a single family tenant moves out, then the entire property is now dead in the water – zero income. But with a multi-unit building, you will likely still have cash flow coming in from other residents while searching for a new tenant.
4. Excellent Mortgage Terms Compared to Commercial Properties
Compared to commercial properties and even single family homes, multifamily properties sometimes come with more favorable lending terms such as mortgage rate, loan-to-value ratio and lower debt-service ratios. Of course, the exact terms depend on the state of the economy, the housing market and other factors. But sometimes there are distinct advantages for multifamily investors.
5. Managing Multiunit Apartments Is Easy and Efficient
While managing any rental property – single family, multifamily or commercial – has its challenges, multifamily residential properties can be a lot easier to manage and maintain due to the simple fact that you’ve got all your tenants under one roof at one address, so you won’t have to pay for maintenance crews to travel back and forth to cover multiple properties.
6. You Can Live on Your Property
Multifamily properties are actually a great way for beginning real estate investors to get started because you can avoid separate housing costs. Many investors start out by moving into one of their own units while renting out the others. It’s an easy way to cut your overall costs, and it makes it easy to keep an eye on your investment property.
7. Hands-Off Investing Is Easy
There’s no rule that says owning a multifamily apartment means that you have to be an owner-occupant landlord or manage the property yourself. In fact, investing in multifamily properties is easy for the hands-off investor. You can hire a property management company to handle it all for you. And you can even split the cost with other investors by going through an investment group or a real estate investment trust (REIT).
If you have questions about multifamily property investing, contact Diamond Capital today.