Many investors are put off by multifamily housing and choose to start their real estate journey by buying a single or standalone family home. However, as their business grows, they will most likely take the leap into purchasing a multifamily housing complex down the line. If you are new to the world of real estate investments, you may want to learn more about the pros and cons of multifamily housing before you put your money into an investment.
What Is Multifamily Housing?
Multifamily housing refers to a building or complex that has more than one unit that houses multiple families. This type of building may also be referred to as a multi-dwelling unit. If the dwelling contains more than five units (or doors, as it is referred to in real estate lingo), it will be considered to be a commercial building.
The Benefits of Multifamily Housing
1 – Appreciation
The most well-known advantage of investing in multifamily housing is that it will appreciate as time passes. This is true for any type of real estate investment, however, with multifamily dwellings, you, as the building owner will be able to control if the value of your property will increase or stay the same as time goes by.
2 – Risk Profile
Your risk profile will be significantly lowered if you choose to invest in a multifamily residential building. In contrast to a single-family home, if you do not currently have any tenants, you will automatically be deprived of income. However, if you own a building that has two or three families living in it, even if you have 10 doors in total, you will still be able to generate income from your property.
3 – Economical Advantages
There are many economic advantages to owning a property that has multiple units for dwelling. You will be able to manage all your real estate properties more effectively if they are under one roof. You will also be able to save on money and time since you will not need to travel far when you check on your tenants and properties.
Considerations to Think About
1 – Tenant Disagreements
Since you will have more than one family living in your building, you may experience conflicts between tenants. These disagreements may sometimes be unavoidable because these families will live in close proximity to one another. You have to be ready to either hire a building manager to help you manage tenant difficulties or handle the conflicts yourself.
2 – Higher Down Payment
Since the building will be larger, you will most likely have to pay a higher down payment than a single-tenant home. However, if you shop around, you may be able to find great deals with your real estate agent that will require a smaller out-of-pocket downpayment and initial cost.
Investing in real estate is a smart move. In this day and age, it is getting increasingly more difficult to find an investment opportunity that will remain stable even in the years to come. Being careful and cautious about your investments will help ensure your success.
If you are new to this industry, it helps to consult with experienced apartment buyers before you proceed. Buying Apartment Buildings will help you be in the know about if your investment decisions are sound or not. We have helped many apartment owners make logical decisions about their properties. Contact us today to see how we can help.