Residential rental demands are at the highest levels they’ve been in three years. And with the unexpected surge not dying anytime soon, investing in multi-family real estate is a profitable idea.
But buying a multi-family property can be intimidating to a lot of people. Especially if it’s their first investment property.
No need to worry, however. Owning multi-family real estate can be a powerful investment strategy. Bringing with it steady cash flow and a stable, diversified portfolio.
Let’s look at 9 reasons multi-family can mean multi-benefits for you.
1. Everything Under One Roof Makes Management Easier
Having several single-unit rental properties spread throughout the city can be daunting to manage. But think of it, how much easier would it be if they were all located under one roof?
Multiple units in several locations may mean you need more than one property manager to handle it all. Which means spending more money. Yet, whether you have 5 units under one roof or 75, one property manager would be able to cover it on their own.
Multi-family real estate consolidates all your rentals into one building, making management cheaper and easier on you.
2. You Get Great Tax Breaks
The government likes it when you provide housing, and they’ll show it in the form of giving you great tax incentives.
Your investment is a business, which allows you to take all sorts of tax deductions. And with real estate investing, there are a lot of things you can depreciate in each of your properties.
That’s why it’s best to get a good accountant. They can help you find all the deductions you qualify for. Ones that you may have had no idea existed.
And it could get better. Your accountant may find out you qualify for government grants, which can offset your upfront costs. Saving you even more money!
3. Easier to Add Property Appreciation
Property appreciation doesn’t just happen on its own. You’ve got to put in the work, upgrades, and money to almost force the value of your property up.
And when you have single-family rental units, it doesn’t leave you with a lot of options. Some upgrades to curb appeal and property functionality help, but it’s work that only helps one property. Which means more work and money is required to upgrade your other properties.
But upgrading a multi-unit building instantly upgrades ALL the units at one time. Getting you more bang for your buck.
Plus, you have more options. Not only can you increase curb appeal and functionality, but you can add amenities. Putting in a gym, a business center, or a nice laundry room will add more value and attract more tenants.
4. Opportunity to Create More Cash Flow
Going along with increasing property value, when you add amenities, you can add to your cash flow.
For example, if you put in a nice laundry room, your machines can be coin operated. Meaning you can continue to earn money with each wash!
Or if you add a functional clubhouse room, you can rent it out to tenants for parties or events.
If you add amenities that not only add to your cash flow but add to the quality of your tenants lives, it’s a win-win for everybody involved.
5. Renting Continues to Be Popular
Renting is still a very popular option in today’s society. Not only do millennials prefer to rent rather than own, but baby boomers are looking to downsize. The convenience and way of life for everybody means the demand for rentals isn’t going down any time soon.
Investing in multi-family properties will
6. It Will Hold Its Value
Making your multi-family investment attractive to tenants will also make it attractive to investors. Which means your property value will hold its ground!
That’s because a steady demand for your units from tenants equals steady cash flow. And that’s super attractive to investors, should you ever want to sell your property.
As long as you continue maintaining the property, making repairs and keeping it looking great, your property will hold its value. That means not only investing in property upgrades but investing in a good staff. You want to bring people in who care as much for the property as you do.
7. Easier to Get Financing
It may seem easier to get financing for a single-family home, versus getting financing for an entire apartment building or multi-family construction loans. But in the eyes of the bank, that’s not necessarily true.
That’s because the bank sees a multi-unit building as a strong source of cash flow. Think about it, if a tenant vacates a single-family home, it’s 100% empty. But a multi-family building continues having cash flow, even if there are a few units available or a couple of tenants pay rent late.
Multi-family real estate is a less risky investment for the bank and easier financing for you.
8. Performs Well in Economic Downturns
Having the economy tank after investing in real estate is always a concern. But investing in multi-family real estate takes on less risk because they tend to remain stable compared to other investment types.
That’s because rental units have a shorter leasing cycle, say 6 months or a year compared to 2 or even 7 years, making them more flexible. They can adjust to changing market cycles better than other real estate investments.
9. It Gives You the Ability to Change Lives
Giving families someplace to call home can feel amazing. Especially if you rehab a building in a community that needs more housing.
But whatever level of investment you’re looking into, from low income to luxury apartments, you’ll have an impact on the families that live in your building You’ll be able to affect change, earn good money, and feel good about giving people a great place to call home.
Multi-Family Real Estate Is a Smart Investment
Knowing which real estate investment to make can be overwhelming. But now that you know what benefits multi-family real estate can do for your portfolio, it makes your next decision a smart investment.
Looking for a real estate agent to help find your next investment property? Check out these things you need to know before working with an agent.