Most people who are interested in real estate are usually conflicted when it comes to multifamily residential units. While investing in them may be appealing to investors who know what they are doing like Than Merrill, some investors, especially the new ones, aren’t quite sure whether investing in multifamily residential units are suitable for their investment portfolio. Well, the answer to that is yes; investing in multifamily units is ideal for your investment portfolio.
For starters, multifamily residential units are more likely to be occupied than any other types of residential units. If you live in Cincinnati and you are in doubt, then ask any Cincinnati Ohio real estate guru, and they will give you the same answer. Investing in multifamily residential units will always pay off, and below are five reasons to prove it:
It’s easy to buy
If you have the choice to buy twenty-five different properties spread over the country or twenty-five properties all designed into a single building, which one will you go for? Well, in as much as the dictum of putting all your eggs in one basket may play a role in scaring you off from buying all of them in a single place, the other advantages of doing so will bring you right back to choosing the multifamily residential complex.
First, it is easy to buy since you’ll only be required to have a sit-down and do a single deal and everything will be sorted out for all the twenty-five or so units. However, for individual houses, you will be forced to do twenty-five exclusive deals which can be quite exhausting, primarily if the homes are spread over a considerable area.
The homes will also cost; differently, all depending on the places they are located. Moreover, that would mean the prices will skyrocket as opposed to when you are buying a multifamily residential unit where all the homes are equally priced and are hoarded together.
Economy of scale
When it comes to the economy of scale, multifamily units are usually on the forefront, and this is so for several reasons. First, maintenance is done at once, which will not only save you the time but the money and hustle as well. Imagine owning a multifamily complex with twenty-five units and owning twenty-five different duplexes.
With the multifamily residential unit with twenty-five homes, you will have to do everything at once. If you want to repair the roof, then its something you’ll do at once and at a much cheaper cost because the roof wouldn’t be covering the same surface area compared to the twenty-five individual roofs. The multifamily units are also located in one place, meaning you won’t have to travel to different places to do the repairs.
However, when it comes to the twenty-five individual roofs, you will be forced to move a lot before accomplishing anything which can be a difficult task. Moreover, even if the units are situated in one area, having to look at twenty-five different roofs is also a daunting task which will cost double or even triple the price of repairing a multifamily residential unit with the same number of homes.
Expect little to no competition
First and foremost, not everyone has the financial ability to acquire a multifamily residential unit. So if you are among the few who can, then you will never have to worry about competition. Moreover, even if there will be a few more in that particular area like it’s usually the case with Cincinnati Ohio real estate as well as other urban areas, you’ll never have to fight over tenants because they will all be filled.
Also, in the error of fixing and flipping homes, most real estate investors are only focusing on single home units. The latter is so because they are cheaper to buy, fix and sale. As a result of this, the market is flooded with investors doing the same. Also, if the market is flooded with people doing the same things, they always expect the profits to take a hit. However, that shouldn’t be a problem if you are fixing and flipping multifamily residential units since very few are doing it.
Multifamily units are most likely to appreciate.
The fact that multifamily residential units are sold quite differently from single family units makes the whole difference. When buying single-family units, most buyers usually compare them to other units. For instance, they typically carry out their research based on other similar properties. So if a similar unit goes for $800,000, then the buyers will expect the property they are eyeing to be about the same price.
The latter is what real estate gurus would like to refer to as the sales approach. However, when it comes to multifamily residential units, they usually use the income approach to determine the price of the unit. What I mean by the income approach is that the owner will estimate what the buyers will earn once they attain the property.
Therefore, if you are looking to make a profit on your sale, you can decide to up the rent for each family and use it to calculate the income. Just make sure you aren’t overestimating because it will not be fair to your buyers. However, still, you can determine the price by bumping up the rent, something that cannot be done when it comes to the single-family units since your hands will be tied at that point.
You can spread risks quite comfortably.
When you own a single unit home, there are times that the tenants might leave and you can’t find a replacement immediately. If this happens, you will lose money. However, the latter usually isn’t the case when it comes to multifamily residential units because they all can’t be abandoned at once unless there is an issue with them.
However, if you are smart enough to keep your multifamily complexes in the best condition, they will always attract new tenants and will always have constant rent coming in. As an intelligent investor, you will also be required to find ways of making your multifamily residential units more attractive to tenants. For instance, you can install a family-friendly swimming pool, a gym, a café for those who are coming from work feel too tired to cook, and so forth.
Thankfully, there are so many smart ideas that you can add to make your multifamily residential units to make them even more attractive to the tenant and in turn, assure you a consistent stream of income. Thankfully, the steady stream of income will ensure you have enough money to make these adjustments, which will only make your multifamily residential complex a tad more attractive to tenants.
Conclusion
If the information given above is anything to go by, then it is clear as crystal that investing in multifamily residential units with bringing you more good than harm. As long as you have the financial ability to either buy or build, then you should go ahead and do exactly that. Moreover, since investing in multifamily residential units can be quite expensive, you might want to get a handful of individuals who are interested in what your idea.
They should also be willing to invest their money in it. However, you’ll have to take your time and find people who are eager to go with you to the end since some people will jump ship as soon as they have the first chance. It would help if you also took your time to look for the best multifamily residential complex. For you to ensure you aren’t making the wrong buy, the multifamily residential complex has to be new. If not, then it has to be in the best condition. The design also has to be modern to attract tenants.