As an investor, you may ask yourself many times if multifamily is the way to invest, and for many people it honestly depends. There are many factors that are involved here, including the disposition of the investor, the goals that you have, and your experience. It also depends on the financial situation of the person, along with the time and sweat that they are willing to put into this. It also does depend on the market you’re seeking to get into, and where people are in their lives.
The best way to determine whether or not this works for you, is to look at the pros and cons, and from there, look at multifamily versus other types of investments, and from there, put it on a pen and paper. Make a list.
Think about what you want, any financial and personal goals, and from there, determine whether or not the pros and cons match up. Once you’ve decided, you can go from here. I’ll tell you here as well some of the pros and cons of multifamily real estate investments..
The first pro, is you’ve got more cash flow since there will be multiple units and one cash flow. While it may not have better ROI, it will have better cash flow, so you’ll be able to carry more each month because hey, more paying you. Single family may have a better return, but not as much cash.
There is also the factor of everything in one place. One roof, one water heater, one HVAC.. This may save you a lot in driving, and you’ll be able to have everything contained, which is ultimately better. Single-family may mean going to different areas all throughout the day.
they’re also rarely vacant. that’s because multifamily properties are always something of importance, and there is always someone there to prevent vandalism and theft, and that may not be the case with single-family, or even commercial homes. it’s also very easy to find tenants compared to other properties, that’s for sure.
You can also save money by living in one of the units in order to keep costs down, and you can count the rental income on your loan application, allowing you to get the property that you have.
But, there are a few cons. The first is that they tend to be harder to finance, since they are often considered commercial properties and require larger amounts of down payments and interests, and usually they require a balloon payment.
They are also much more difficult to sell. The amount of multifamily properties is much smaller than single-family ones, and usually, those that buy are just investors trying to make a deal, so unless rents get increased, you won’t et more gains.
Then there is the factor of hey, more issues with people. They come with more tenants, so they will have more problems, and usually, you’ll want to hire someone to help with this.
Then there is the fact that management expertise is required. it’s not passive, so you essentially need to real estate management company like point BreeZE real Estate to help with the headaches, so it costs more money.
So, as you can see here, there are pros and cons. Is it a good investment? Perhaps. It all depends on who you are as an investor, and your financial situation, market, and the experience that you have in running a business. If you truly want to get into it, start out small and then grow from there. You essentially can find a duplex or a quad that will work for you, and you’ll be able to determine whether this is right for you.
Typically, these properties are easier to get into, finance, and manage, and easier to get out of if things get too hairy. But you should definitely talk to the mentor that you have as an investor before you consider going into this, because it does have its pros and cons, and you’d be amazed at some of the different factors that go into it, and some of the other actions that you can inevitably take, and some of the different elements that you should consider when you’re investing.