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Multifamily vs. Single-family Investments: 5 Reasons Multi Wins

Multifamily vs. Single-family Investments: 5 Reasons Multi Wins

If you’ve decided to purchase a rental income property, but you’re wavering between the single-family and multifamily, you’ve come to the right place. In a head-to-head comparison, there are five simple reasons why a property investment with multiple units yields higher gains over the life of your investment:

1. More tenants lead to greater income potential.

Multifamily properties naturally require more renters, which leads to more rent collected. Also, vacancies aren’t a 100 percent income loss like with a single family. While more tenants also mean more need for maintenance and solid property management, building a great team from the beginning lessens any potential headaches.

2. Younger generations want apartments.

Younger generations don’t want to mess with maintenance, a house, or a yard. They’re also looking for amenities that only apartment communities offer. Apartment living is a primary choice for recent graduates and young professionals.

3. Multifamily communities appeal to downsizing Baby Boomers.

For many of the same reasons as their younger counterparts, Boomers want apartments as they downsize from their high-maintenance family homes. In growing numbers, these young-at-heart retirees choose communities that offer amenities, convenience, and community, over retirement communities.

4. Multifamily requires on-site staff.

That’s not a negative. On-site staff means a core group of trained professionals will handle all maintenance and business aspects of your investment property. That’s a win for property owners. Building a reliable property management team reduces your day-to-day responsibilities. You can sit back, relax, and let your investment work for you.

5. Per rental unit, multifamily is a better deal.

If you were to purchase 150 single-family rental units, you’d pay a pretty penny for that investment. Multifamily offers an efficiency of scale in a compact package and can compete price-wise with even one single-family property any day. This means you’ll get a quicker and more substantial return on investment, and that’s what it’s all about.

Class A Management Multifamily and Single-Family Investment Process

The Class A Management team is here to walk you through the investment process and property management lifecycle, including:

  • assessment 
  • due diligence
  • purchase decision, and 
  • everything that follows

Contact us today to learn more about building or expanding your investment portfolio through multifamily income properties. 

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Multi-family Property Makes Cents

Multi-family Property Makes Cents

A multi-family property can be a lucrative investment. Dоwnturns іn thе есоnоmу have become all too commonplace. Yet, while markets ebb and flow, real estate investments offer greater versatility to the avid investor. Follow the need for housing rather than gambling on the latest trend. Tаke аdvаntаgе оf орроrtunіtу durіng any rесеssіоn by shifting your fосus to income properties.

Investment opportunities

Adding rental property investment to your portfolio can decrease risk during uncertain times. New real estate gives the investor many routes to prosperity. Multi-family housing ranges from duplexes to high-rise condominiums

The guidelines below offer a fresh perspective on the benefits of property investment.

  • Саshflоw is thе mаіn rеаsоn to іnvеst іn rеаl еstаtе. Іnvеstіng іn араrtmеnts increases саshflоw sіmрlу bесаusе thеrе аrе mоrе fаmіlіеs undеr thе оnе rооf gеnеrаtіng mоrе rеnts fоr уоu еvеrу mоnth.
  • Invest with lеss rіsk. Моst реорlе thіnk thе bіggеr mоrtgаgе and dеbt equals a greater rіsk. Yet, the opposite is true. Whеn уоu buу араrtmеnt buіldіngs уоur rіsk оf vасаnсіеs аnd mоnthlу overhead аrе sрrеаd оvеr multірlе tеnаnts. 
  • Bеnеfіt frоm есоnоmіеs оf sсаlе. Тhе mоrе unіts іn а соmрlех, thе grеаtеr thе есоnоmіеs оf sсаlе (uр tо а роіnt). In lаrgеr араrtmеnt іnvеstmеnts, thе реr unіt ехреnsеs аrе lоwеr lеаvіng mоrе іnсоmе аvаіlаblе fоr the investor. The lоwеr ехреnsеs реr unіt the hіghеr оvеrаll саshflоw. 

For long-term investors, multi-family properties make sense. They can leverage the strоngеr саsh flоw frееd uр bу есоnоmіеs оf sсаlе tо hіrе а соmреtеnt, рrоfеssіоnаl рrореrtу mаnаgеmеnt соmраnу like Class A Management.

Multi-family property management

A professional property management company manages all aspects of the investment. So, handing off these responsibilities аllоws уоu time to manage more important things like family, travel, and other investments.

Class A Management has the expertise to handle every step of the property investment process. From acquisitions and renovations to day-to-day management duties, our team of professionals minds the details so you can just sit back and watch your portfolio grow. 

Contact us today to speak with a knowledgeable team member about your current property investments or opportunities to expand your holdings.

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What Does a Property Manager Do?

What does a property manager do

Real estate investors are highly self-sufficient, independent thinkers who ask great questions. They want to know where their money is going, what benefits they’ll receive when paying for a service, and how that translates into building a portfolio that provides security and wealth. Our favorite question, of course, is: What does a property manager do?

In order of importance, here’s a list of everything great property managers can do for real estate investors.

Generate positive cash flow

Investors take a risk buying rental properties. A good property manager understands that risk and knows that time and occupancy rates are of the essence. Here’s how property managers generate cash flow for investors quickly and reliably:

  • Set rents that are appealing to the local market
  • Market properties to a local target audience
  • Select applicants who will pay rent on time every month
  • Collect rent from all tenants

It’s all about the rent. Collecting that rent depends on many factors that a reliable property management company can manage so owners see positive cash flow.

Protect landlords from costly legal and tax situations

Laws protecting tenants and property owners vary from state to state and even within local municipalities. Those laws are in place to protect everyone from unfair or discriminatory housing practices, and it’s a property manager’s job to follow local and state laws when vetting tenant applications, writing leases, collecting rent, and even handling evictions.

In addition to following local and state laws regarding landlord-tenant agreements, property managers also provide monthly income and expenditure reports that keep property owners apprised of a property’s performance. That information helps owners make investment decisions, such as making upgrades and renovations or identifying opportunities to sell a property to maximize profit.

Property managers also provide owners with tax documents necessary for annual IRS filing. Those include yearly investment property expense reports and 1099 forms so owners can claim rental property income.

Keep properties in good repair

A well-maintained property will provide income much more reliably than one that falls into disrepair. Property managers make sure that valuable rental investments continue to provide owners with cash flow by regularly providing the following services:

If you’re a property owner looking for an experienced property management company with a record of success, Class A Management is ready to handle all your property investment needs. 

What do property managers do: comprehensive management

The correct answer to “What do property managers do?” should be “everything!” Finding a property management company that offers comprehensive property management services doesn’t have to be time-consuming. Contact us today to learn more about how Class A Management can relieve you of some of the burdens of rental ownership while protecting your investment and helping grow your portfolio. It’s what we do.

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Building a multifamily strategy from the ground, up

Multifamily strategy development

Real estate investing carries a daunting learning curve. But relax: you don’t need to know everything. If your focus is multifamily investing, we’re about to straighten out that curve a bit by taking you through this tri-level approach to building a multifamily strategy.

The Foundation: Know the Market

Rents in your area will be based upon local demographics and demand for apartments. Do a little research to find out which properties are the “hottest” in your area, and find out why. Do your local renters want luxury, or are they looking for walkability and convenience? Start looking for properties according to what renters want, and what’s forecasted to remain in demand for at least 10 years.

The Ground Floor: Choose Your Scale

Multifamily doesn’t only include apartment complexes with a few hundred units. Smaller complexes with fewer than 50 units, and even properties with 2-4 units, offer the economy of scale that makes multifamily so lucrative for investors. More units involve a larger initial investment, more liability, and more potential income for the investor. Decide what level of financing and risk you’re most comfortable with, and go from there. A good financial advisor can really help narrow down your choices at this level of planning.

The Top Floor: Buy, Sell, Flip

Again, decide how involved you’d like to be in the daily ins and outs of multifamily investing before you decide what you’ll do with your investment. In its purest form, real estate investing is a “buy and hold” proposition. You’ll build wealth from tenant rent, and eventually, if you’ve made a good deal, you’ll sell your property for a profit. Flipping properties is popular these days thanks to reality television, but the scale is much bigger, the investment more substantial, and the timeline longer for multifamily flips.

Whatever your approach to developing the best multifamily investing strategy for your portfolio, take that research and turn it into a workable business plan that includes viable exit strategies for every situation. That guarantees that you maximize income and profit by knowing when it’s time to buy more property—and when it’s time to sell.

The Super Special, Secret Floor

This floor is when you realize the best multifamily strategy involves working with a property management company that knows these investments and helps you get the most from the investment. Reach out to us at Class A Management today to learn more.

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3 reasons why multifamily makes the best real estate investment

Why multifamily? Found out here.

Investors know that volatile markets can send financial gains plummeting, but real estate investing is typically a viable shelter that appreciates in value. Let’s explore four reasons why multifamily is the best investment in the real estate market.

Less risk for lenders means easier financing

Multifamily properties like apartment complexes require a higher initial investment than single-family real estate properties. That might seem like a deal-breaker, but the reality is that while multi-family loans are larger, they’re less risky for lenders because they generate cash flow even when not fully occupied. A single-family home, on the other hand, could be seen as high-risk because, when vacant, it generates no cash flow and carries a higher probability of borrower default.

Higher occupancy equals cash flow for landlords

High occupancy rates are the primary goal with rental property investments, but a single-family home that is unoccupied is a liability that many investors cannot afford to risk. While rents may offer a higher profit margin for single-family properties, multi-family rentals are more affordable for prospective tenants and easier to market for more stable income. Granted, there will always be certain markets in which single-family properties are in high demand, but a successful multi-family investment property rarely sees occupancy rates that result in negative cash flow.

Ease of maintenance and upgrades

Attached multi-family properties are also easier to maintain due to efficiency of scale. Any real estate investment will require regular maintenance such as roofing repair and replacement, and that’s where multi-family properties help investors save money by sharing a common roof. Owners can also save on other upgrades like windows and doors, insulation, and exterior painting for multiple rentals within a single building.

Full service property management

Hiring a property management company is always a good move for multi-family investors who don’t want to spend their time marketing, collecting rent, and performing maintenance and repairs. Class A Management professionals are prepared to handle all the details, from pre-purchase consulting to deciding when it’s time to sell, and everything in between. Contact us today to learn more about how to maximize your return on investment with a team that wrote the book on multi-family property management best practices.