3 Benefits of Investing in Multi-family Real Estate
If you’ve got some extra cash and want to make an investment, real estate may be a good option. Although there can be fluctuations, unlike stocks, there is tangible value in a property. It’s also a bit easier for the layperson to understand. Here are three benefits to choosing multi-family real estate to invest in.
Cash Flow Plus Easier Financing
When you purchase a rental property, you are getting passive income each month, and one that is more consistent than trying to rent a single-family home. With an apartment building, for example, you can afford to have a percentage of the units vacant because you’ll still be earning on the rest.
What’s more, because a regular income is more likely, you look like a better risk to a lending institution. So even though the purchase price may be far more than for a single home, you may have an easier time getting financed.
Growth Is Easier
If you’re looking to begin or expand your portfolio of properties, you can do so faster by purchasing multi-unit apartment buildings. One single-family home gives you just that– a single rental unit. A building with 15 apartments in it gives you 15 rental units with just one purchase.
Hiring Management Is Feasible
If you’re the type of investor that doesn’t want to get involved with the day-to-day management of rental properties, you may not have a choice if all you’ve got is a single-family home. The monthly income on that is not likely to allow you to afford the salary of someone to do oversee the property on your behalf.
A larger building, on the other hand, should generate enough money that not only can you afford that salary, but it makes good economic sense. You need to ensure that your properties and tenants are being taken care of so that you don’t have vacancies. With a multi-family building, that may require more time than you can spare, even if you wanted to do it yourself.
Even if it may seem at first that getting started in real estate should be done slowly, with one unit at a time, this actually may not be your best bet. Not only is it easier to get financing on a larger building, but you’re far more likely to start seeing a profit faster. However, while real estate is easier to navigate than the stock market, it may still be worth speaking to a financial advisor to help steer you toward the smartest investment.