Real estate investing has long been a proven method of building a profitable investment portfolio. Instead of passively investing in financial markets, investors can “get their hands dirty” by playing an active role in real estate. Multifamily properties require even more attention and are built to deliver a steady stream of income. Here are three reasons to invest in multifamily properties.
Easier to Finance Than Single-Family Properties
Although multifamily properties are more expensive than regular real estate, banks will gladly lend investors’ money for a million dollar property because it can deliver multiple income streams. Single-family properties only produce one income stream if investors plan to buy real estate for rental income. If the renters leave, it is 100 percent vacant. If renters leave a multifamily unit, it has little impact on the overall vacancy rate.
Building a Profitable Short-Term Investment Portfolio
Investing in single-family properties for the long term is not a bad idea, it will just take longer to build a profitable portfolio. Meanwhile, savvy investors will buy one multifamily property with 10 units and 10 income streams instead of 10 single-family properties with 10 income streams. The math is pretty simple using this logic. One property with 10 units will help build a profitable real estate portfolio faster than buying one single-family property at a time.
Using a Property Management Company
Managing properties, whether they are single family or multifamily, takes time, patience and money. Most single-family investors do not have the luxury of contracting property management companies to take care of their investments. Multifamily investors, on the other hand, do contract these companies because of the multiple income streams.
Remember, one single-family property produces only one income source. In most cases, it does not make sense financially to hire a company to manage one or even two single-family properties. It does make sense most of the time if the one property has multiple units delivering several income streams.
The Bottom Line on Multifamily Properties
Real estate is well-known for its investment diversity. Investors can use multiple strategies to achieve a high return-on-investment (ROI). Multifamily investing presents even more diversity and an opportunity to deliver several income streams. Financing these properties is easier than most average investors think, and contracting a property management company to oversee the properties can lead to a profitable investment portfolio.