There are lots of benefits attached to multifamily real estate investment compared to single-family home. Check out the following benefits, and consider adding some of these assets to your portfolio..
1. Control over Asset Value & Performance
One of the most significant benefits of multifamily real estate investment is the control the investors have over their properties. You can renovate a single-family home, and sell it for a little more, or increase the rent yearly. It is still the same single home, and nearby real estate comps generally cap its potential. Owners of multifamily homes can do a lot more. Every community development can lift the value of the whole building and every unit. Put in a pool, and you may boost the appeal and value of 100 units, compare to just one house. The same goes for lobby spaces, landscaping, and exterior painting. The ROI on those upgrading can be more prominent than on only one home. You can as well reposition the house to appeal to different crowds. Take for instance; affluent seniors seeking an assisted living facility, Section 8 tenants, tech workers or high-earning professionals, this can honestly affect the rents you get and could push them far above adjoining properties. These increase cash flow and net profit and also uplift the value of the entire property.
2. Cost per Door
Multifamily homes typically cost less per unit compared to single-family homes. For instance; you may find a single-family home, and a duplex almost next to each other for approximately the same price. Still, you may get the same amount of rent for each unit in the duplex. Let’s say the sales price is $300,000; you are only paying $150,000 per unit in the duplex if local rents are $1,500 per month. The house could only give you $1,500, while the duplex may give you $3,000 a month in income, $1,500 and free use of the other part
3. Efficiencies of Scale
Amazon and Walmart do so well because they do things on a large scale. They are smart enough to negotiate better discounts, move products more effectively and manage more efficiently. With multifamily homes, you can commonly operate 100 units for less time and funding, than trying to buy 100 single-family properties. In proportion, marketing costs, labour, material, and technology are all lesser with a multifamily home structure. Also, managing loan paperwork and closings is immediately lower consuming. You can have just one leasing agent, on-site property manager and, handyman since everything is in one place. Compare this to maybe having a list of spread-out single-family homes, and you have to manage those teams.
4. Exit Strategies
Multifamily homes offer a series of exit approaches for investors. For instance, you could sell it or better still convert units to condos and sell them separately for a lot of money. You could also offer the building on seller financing terms, and create a new note asset. Lastly, you could bring in partners with capital to partly cash you out or refinance to regain your capital and expand again.
A single-family home investing is good, and it has its benefits. There are more significant benefits to multifamily homes investing too. Lots of investors are now stepping up to this class of asset. Contact your Realtor to expand into this niche ASAP!
