Multifamily real estate like duplexes and apartment buildings can be quite profitable investments. These properties provide a good potential for passive rental income. As Kanat Sultanbekov says, multi-family properties can also be easy to finance, and may allow investors to grow their portfolio in a short amount of time. Moreover, one can always hire property management companies to oversee multifamily real estate.
Kanat Sultanbekov discusses the advantages of investing in multifamily properties
Investing in rental properties is among the smartest ways for investors to enjoy an additional source of monthly income. It provides them with the opportunity to invest in properties whose values tend to steadily appreciate over time. As long as the units are occupied, people investing in multifamily properties should receive a regular rental income. Moreover, these properties may even offer a hedge against inflation. After all, as the cost of living goes up, so do the rental prices. This basically implies that even if the economy is not doing great and other investments are not performing well enough, the rental income would have the potential to increase.
The demand for rental housing is consistent and strong, in general. As the country’s population continues to grow, an increasing number of people are choosing to rent instead of buying a house. As a result, the demand for rental properties like multifamily buildings is likely to remain strong down the line, providing the potential for steady returns on investment.
Multifamily real estate can generate a strong cash flow consistently. This would be true even if the property has a handful of vacancies or a few tenants are late with the rent. A 10-unit property with one vacancy would only be 10% unoccupied, but in if a tenant moves out of a single-family home it shall become 100% vacant until it is rented again.
Investing in multifamily properties would provide investors with a good level of diversification. Rather than putting all the eggs in a single basket, investors can spread their investment among several units in multifamily real estate.
As Kanat Sultanbekov mentions, by investing in multifamily properties, one can benefit from economies of scale. The cost of managing and maintaining a single multifamily home may, on the whole, be lower than the cost of maintaining a separate single-family home. Moreover, the income from multiple rental units would be helpful in offsetting the costs of any vacancy periods in the individual units. Multifamily real-estate essentially would be well-suited for investors desiring to build a relatively large portfolio of rental units. Buying a 20-unit apartment building would be much simpler than doing the research and purchasing 20 different single-family homes. In the case of the latter option, investors have to deal with 20 different sellers and carry out separate home inspections on twenty houses that might be located far away. In certain cases, the investors may even have to take out a separate loan for each property. Hence, to steer clear of all these hassles, it is better to buy one property with 20 units.