Are you wanting to grow your investment business but don’t know where to start? Multi-family properties can be a great option for investors looking for growth and the possibility to step back from the daily management of the asset. Multi-family properties offer many advantages over other types of investments, and there are several compelling reasons to invest in them. In this blog post, we’ll discuss the top three reasons why investing in multi-family properties is a smart move for your portfolio. By understanding the potential benefits, you can make an informed decision about whether multi-family investments are right for you.
1. More Cash Flow
Compared to the monthly income of single-family properties, multi-family investments have the potential to bring in exponentially more income per month through various strategies. The larger the property, the greater potential there is for rental income. For example, when a multifamily unit is vacant for a short period of time, it is less painful than when a single-family home is vacant, leaving no income at all for the investor (meanwhile, costs do not stop for an unleased house). Investors still earn a significant portion of the rental income from other units without drastically changing the bottom line. Multifamily units are also more responsive to changes in renal prices, with multiple leases requiring renewal at different times throughout the year. This means multifamily investors can capture rises in rent prices proactively, increasing the property’s overall income throughout the year. Lastly, investors can also add non-rental revenue, such as on-site amenities, additional parking, and premium units that bring in additional money. With all that extra cash flow, multifamily investing can be a great tool for building wealth in one transaction.
2. Fast & Simple Portfolio Growth
Which is faster, buying a 10-plex or buying 10 single-family homes? In one multi-family transaction, investors can own and manage a much larger asset, increasing their overall net worth and growing their real estate portfolios much faster than with single-family real estate. Just imagine — building a small portfolio of 10 single-family homes means funding 10 purchases, managing 10 individual assets, and a much larger amount of time to find and close on all these deals, not to mention how spread out geographically these 10 properties might be. By buying multi-family properties, investors can achieve the benefits of real estate investing more quickly, including building wealth and increasing cash flow, with the investment in one easy location, with one transaction and one asset to manage. Hoping to double or triple the number of units? Adding an additional multifamily property to your portfolio compounds the rate of growth without the inefficiency and effort of building it all off of single-family properties.
3. Semi-Passive Investment Potential
While some real estate investors may enjoy being involved in the day-to-day management of their properties, many would rather focus on building their investment business. But with many smaller properties sprinkled throughout a market, management of single-family homes can be a headache that doesn’t cash flow enough to afford a management company.
Multi-family investments, however, offer the potential for an investor to be “semi-passive,” meaning they will be required to ensure the positive management of the investment, but they will not need to take every call and handle every lease. Because multi-family properties produce a higher income, they are better positioned to afford an excellent property management company that will allow the investor to get out of the daily management of the property and back into building their business.
Investor Loan Source, a private money lending company, provides high-quality investment property loans to private real estate investors at the lowest costs possible. Our process for providing real estate investors with private lending is unique. We place emphasis on the hard asset and value of the collateral (property) and less on the borrower. Our asset-based real estate investment loan model means we can provide more money lending to more investors than is available from standard bank loan models. At Investor Loan Source, providing real estate investors hard money loans is our business; it’s all we do. We offer several business real estate loan products designed to serve a variety of investors and property profiles, including private money lending for properties to sell on owner finance.
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