Shifting from a single family investment property to a multifamily one can totally change the course of your real estate venture. There are lots of investors who have established a strong and solid rental portfolio mainly with single family investment properties. If you are still thinking if it is time to go for a multifamily property, some of the good reasons to do so are the following:
There are beliefs that multifamily units tend to come with more risks. But the truth is exactly the opposite. If you have a single family property, you just rely on a single tenant’s monthly payment. If that payment suddenly stops paying, you will not receive any income until things are resolved. While this can also happen with multifamily properties, there are slimmer chances that nobody will pay if you choose your tenants properly. Even if one tenant stops paying, there will still be income courtesy of the rest of your tenants.
Increased Flow of Cash
You can get an extra flow of cash from the income generated by the units of a multifamily property. Having this kind of property in an ideal location can easily do that. When there are more units, you will also be able to generate more income compared to having just one unit.
Improved Initial Equity
Due to the guidelines in down payment, each time you buy a multifamily property, you will be starting off with a good equity amount. Aside from the high down payment, you also get the chance to establish equity through getting the property at your own price in addition to putting more value in all the work you do. Unlike most single family properties, you will start with large equity amount. It gives you flexibility and option, at least more than single family properties will offer.
Many real estate rages are focusing on the single family properties. It leaves door open for the multifamily investors. If there are decreased competition in most areas, values of property have stayed flat, and in certain cases, these even gone down. Right now multifamily property guidelines require down payment of about 15 to 25 percent of purchase price. Not all investors have the wants or resources to acquire this down payment. It is yet another reason why a lot of multifamily properties have stayed on the market, simply waiting for one to make an offer.
Never Stop at 4 Units
Many investors think of multifamily properties as just 2, 3, or 4 units. Although these are no doubt the most in demand, you don’t have to stop there. The moment you experience running multifamily properties, you will discover that there are actually limitless possibilities. From there, you can then go to the world of apartment and mixed use investing. After this, you can consider strip malls as well as other large multifamily complex buildings.
Before investing in any kind of real estate, make sure you educate yourself first to know what you will get into.
Posted by Randy Blakeslee- GetnSocial
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