Most folks who begin with Real Estate investing start by buying single family homes, which is great, however I would strongly recommend you consider investing in Multi-family properties.
Investing in multi-family properties has many advantages, the most important being cash flow. Below, I outline 5 reasons why investing in multi-family properties makes sense.
I have many single family units in my portfolio but after investing in my first multi-family project, I won’t be investing in much else besides multi-family projects.
Below are 5 reasons why investing in multi-family units make sense for all investors:
- Cash Flow: I make a few hundred dollars a month after mortgage payments on my single family homes, with my multi-family building, I am making well over $1,500 a month after debt service paid.
- Economies of scale: When you own 12 single family units around town, you may have 12 roofs to replace, or 12 floors to replace or check on. In contrast, when you have a 12 unit multi family unit, you have everything under one roof and don’t need to run all over town to fix multiple units.
- Less impact when you lose a tenant: When you lose a tenant in single family home, you lose all the funds for the proceeds for that unit, in contrast when you lose a tenant in a multi-family unit it doesn’t sting as much because you still have cash flow pouring in from other tenants.
- Managing and maintaining is easier and less stressful: When you have 12 units under one roof, it is much easier to maintain than if you have a leaky faucet and you need to send plumber/handyman all over town to check on each individual home.
- You can make more money once you sell: Multi- family properties can appreciate much more than single family homes. If you make improvements to a single family home you will see returns on your investment, the same is true for a multi-family building except multiply that by the number of units in your building.
Multi-Family investing is a great investment strategy, however like everything else it comes with its risks. If you are considering investing multi-family units, please be certain to have a maintenance person and good management team in place, if not you will be in a world of trouble. If you have a good team around you, don’t hesitate and start looking for multi-family units to invest in as they are the cash kings in the real estate investing business.
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