Every real estate investor should consider multi-family investment as an opportunity. It offers you with a new source of regular income.
The real estate market is tricky and each investment you make has a long list of advantages and disadvantages. In this post, we’ll be equipping you with a guide about pros and cons of investing in multi-family homes.
Purchasing residential properties and renting them out is one of the oldest ways of getting into the real estate business. However, when you rent out a single family home, there’s only one tenant that’s paying you.
On the other hand, if you observe the residential market trends of multi-family homes, they aren’t that bad either. Even if you purchase a property like that at a price slightly higher than the market, you’re still guaranteed multiple rent checks each month.
However, this is only possible if your rental property is in a rather desirable area. If not, you may have to pay the maintenance expenses from your own pocket until it gets occupied.
The monthly financial burden at your end decreases with the number of units in your property. Making a major repair in a property occupied by multiple tenants will divide the expense, helping out both the tenants and you.
For instance, repairing the front porch may affect multiple tenants. So they should chip in together and get it done.
More Tenants, More Problems:
More tenants mean having more people to manage. They’ll bother you for every concern they have about the property. Rent collection is also comparatively difficult for multiple tenants. However, all these issues can be solved by hiring a property management company to do the job for you.
Harder to Get Financing:
Another major disadvantage of purchasing a multi-family home is that banks don’t offer the same leniency in loans for these as they do for single-family homes.
Mortgage financers also realize the benefit duplexes can give to investor and that is why mortgage deals are also hard on the investor’s pocket.
Reselling a property that can accommodate multiple families is a fairly tedious task. Finding a number of families that can purchase a property together is an impossible task. While not a lot of people are willing to make investments that big unless convinced properly.