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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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Property Investment Opportunities in A Growing Industry

Property Investment Opportunities in A Growing Industry

The demand for multifamily living continues to increase. High demand is good news for those involved in investment property ownership and management. In addition to continued high occupancy, on a national level, industry experts predict the nation will need an additional 4.3 million multifamily units by the year 2035. The current demand for new multifamily units is 266 thousand per year just to meet demand. 

What does this mean for property investment opportunities in Texas? 

Texas property investment opportunities and industry overview

Texas is home to 16 major cities. Each of these cities has a unique local property investment market. The one thing they all have in common is their significant contributions to a heavy statewide industry. 

The multifamily housing industry in Texas currently represents:

  • 4 million residents
  • 2.27 million apartment homes
  • $8.3 billion contributed to the Texas economy

“Now is a great time for current investment property owners and those wishing to invest for the first time,” states Cathy Fontana, owner and CEO of Class A Management. “We closely monitor all aspects of the Texas investment property industry. New construction and community expansion projects are creating good opportunities to expand your investment.” 

Class A Management actively works with clients to positively leverage high industry demand to maximize investor returns. 

Find the information you need with Class A Management

To meet current industry demands, 47 thousand new units across Texas must enter the market. Dallas and Fort Worth markets need to contribute 19 thousand of those units to meet yearly local demand. 

For over four decades, our team of multifamily industry experts has continued to provide unparalleled service for both investors and residents. By closely watching industry and market trends and accurately interpreting relevant data, Class A Management skillfully manages your current investment holdings and presents opportunities for potential investment expansion. Our team makes assessments and conducts due diligence, providing you with the information you need to make investment decisions. Once you decide to expand your property investment portfolio, we will be with you through the whole acquisition process with our brokerage and development services, then provide productive property management. 

Contact us to discover all the data associated with the communities where you have investments, then discuss how this data helps identify the best investment opportunities for your local market. 

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Who You Need to Know When You Own Investment Properties

Investment Properties

Real estate investing is about having patience and making the right choices. It starts with making the right purchase decision, and those choices continue as you build relationships and leverage the expertise of trusted professionals. When it comes to owning investment properties, just like in so many other areas of life, it all comes down to who you know.

Real estate attorneys
A real estate attorney can be a make-or-break decision in a real estate transaction. These professionals help draft, review and manage the real estate documentation, including contracts and titles. The legal guidance from the real estate attorney is critical to ensuring the transfer (i.e. purchase or sale of a property) is legally binding and in your best interest.

Tax experts

Having the right tax expert in your corner during a property investment transaction could save you thousands. Do your research when it comes to hiring. This includes seeking referrals, reading reviews and even getting a second opinion when it seems necessary.

Handymen/women
Staying on top of maintenance and repairs can also save you thousands. It’s necessary to manage a maintenance checklist for things like plumbing, HVAC, electricity, etc. consistently. If not managed properly, the cost compounds as damages and their side effects quickly add up. Finding and employing a trusted and well-reputed handyman or handywoman is the key to avoiding such a mess.

Property Management Companies
A property management company is a one stop shop. It handles the prospects and the tenants, and will take care of a host of services. These include: consulting services, including brokerage and assessment; development services, including contract management and disposition; administrative management, including tracking and monthly statements, collection services, and financial management; and maintenance services, including interior and exterior repairs and operations, lease management, and application screening.

Need a trusted property management company in your corner? Contact Class A Management today.

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Financing a Rental Property: What are Your Options?

Financing a rental property

By Anthony Gilbert, REALTOR, Seattle, WA

It’s no secret that investing in real estate can be a smart decision. Still, for those looking to break into the world of renting out properties for income, there’s that first challenging obstacle to get over: financing. Getting approved for financing on one’s first rental property can sometimes be an ordeal, but by being aware of your options and ultimately choosing the one that best suits your needs, you’ll be on your way to managing your first rental property in no time.

Cash

Obviously, paying cash for a rental property is the most cost-effective and convenient option—but it’s also not very realistic for most investors just getting started. Still, for those who have the means, paying cash for an investment property can yield a number of benefits

For starters, paying cash means not having to jump through the hoops involved in getting approved for financing from a bank or other lender, which is a little tougher for non-primary residences. And of course, with no loan, there is also no interest being accrued on money borrowed. This, in turn, frees up cash to make renovations on the property and pay for other routine maintenance as a landlord.

Finally, making a cash offer on an investment property automatically gives you a competitive advantage against any other offers that might be on the table.

Owner-Occupy

For those who are just getting started with their first rental property investment, an owner-occupy approach may be best for financing. With this approach, you take out a traditional mortgage (usually a 30-year mortgage) just as you would if you were buying a home that you planned to live in yourself for many years. From there, you live in the property for the required 12-month minimum before turning around and renting the property out for a profit.

The best thing about this option is that, even after you’re no longer living in the property itself, you’re still able to enjoy the original loan terms, including your interest rate. One thing to keep in mind with this type of financing, however, is that it’s not practical if you want to hold multiple rentals at once.

Bank Loan

If cash or owner-occupy aren’t viable options, a conventional bank loan may be worth exploring. When you opt for a conventional bank loan, you will generally be expected to put about 30% down on a rental property. However, the nice thing about this option is that when you take out a bank loan for an investment property, most banks will factor in estimated rental income from the space into the debt-to-income rations they use to determine your interest rate and other loan terms. This, along with having a decent credit score, can help to reduce interest rates and ensure reasonable terms on a loan.

Private Loan

For those with less-than-perfect credit or those who want to save on closing costs, shopping around with private lenders may be a smart option. Because private lenders can set their own loan qualification requirements, it’s generally easier to get approved for a private loan than a conventional bank loan. Furthermore, interest rates usually tend to be lower on these loans because the repayment terms are shorter—meaning you’ll pay off your loan sooner and pay less in interest when all is said and done.

Knowing the options available to you when seeking financing for a rental property is important. By keeping these options in mind and assessing your own current financial situation, you’ll ultimately be able to make the smartest and most cost-effective choice for your first residential investment property. If you’re still unsure what’s right for you, consider speaking with a financial advisor, rental property management company or real estate professional.

About Anthony

Anthony is a full-time real estate broker with Coldwell Banker Danforth, located in Seattle, Washington, and specializes in working with clients in the Eastside Seattle communities of Bellevue, Redmond, Kirkland, Issaquah, Sammamish, Snoqualmie Ridge, Fall City and North Bend, located in the picturesque foothills of the Cascade mountains. 

He takes great pride being in-tune with both the professional and human element in every real estate transaction, and truly enjoys helping clients through the entire home-buying and/or selling process.

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3 Reasons Property Investment in Dallas has a Bright Future

Property investment in Dallas

What does the future hold when it comes to property investment and management? 

That’s the question that plagues investors and managers when markets become volatile like they are now. The real estate market outlook depends heavily on the state of the economy, inflation, interest rates, and market projections. 

The good news is, despite some contradictory predictions, the Dallas rental market continues to perform well, as rents and occupancy rates have hit record highs and have stabilized.

“The future of the Dallas rental market looks promising,” says the owner and CEO of Class A Management,  Cathy Fontana. “We’re seeing positive things for all our clients’ Dallas properties.” 

With more than 40 years of property investment and management experience in the local Dallas market, Fontana says she is confident about the future.

“Now is a great time to own and manage multifamily properties in this area.”

Here are the top reasons we’re optimistic about the future of property management and investing in Dallas and nearby areas.

Reason #1: Demand Remains High

It’s no surprise that demand is high. Dallas continues to adapt to the needs of current and potential residents. Even though the area ranks first in new construction, the vacancy rate continues to stay low. 

In addition to attracting new residents, 62 percent of 2022 residents chose to renew their lease. The continued trend of potential residents from other states, such as California, also contributes to high demand. So, why is this area so appealing? 

Here are some of the top reasons Dallas is attractive to potential renters: 

  • A robust job market
  • Highly rated schools
  • Favorable local tax laws
  • Easy access to various entertainment venues

An appealing environment with ample opportunities is great for residents, but how does this translate into high returns on property investment? 

Reason #2: Market Analysts Love the Dallas RE Investor Outlook

Data from 2022 investment property research speaks to a promising future. Market research gathers and analyzes data property managers and investors use to make informed decisions about where to place assets. An expert manager knows market trends and outcomes, and how to leverage these into property management opportunities that result in investor asset growth. 

Research numbers take the following data into account: 

  • Number of days vacant
  • Percent occupied by renters
  • Number of prospective renters competing
  • Percent of renters who renew their leases
  • Share of new apartments completed in 2022

The results are in, and they show good standing and great potential for the Dallas property management market. The Dallas occupancy rate reached its highest at 95 % during 2022 and currently sits at 92.4%, ranking the city first in occupancy rates. In addition to high occupancy, Dallas was ranked as the third most competitive market at the end of 2022. 

How does this compare to other markets? Dallas beat out Houston, San Antonio, and Austin when it comes to Texas metropolitan markets. These areas also ranked high, with occupancy rates sitting just above 90 percent. 

Knowing where your investments sit within a market is good for big-picture analysis. Still, to ensure overall investment success, consider other factors more personal to residents. 

Reason #3: Residents Choose to Rent in Dallas

Here are five factors going beyond basic supply and demand to show why Dallas residents are choosing to rent, keeping investment properties in high demand. 

  1. Builders are catching up: New construction is catching up from Covid-19 delays. The worst of the slowdown seems to be over, but there are still some issues with supply and labor. Even with a large amount of new construction in the area, occupancy is keeping pace with development. 
  2. Home ownership is too expensive: Home ownership continues to trend downward. As prices stay high and interest rates continue to rise, home ownership is proving too expensive for many. What is disheartening for home sellers is positive for real estate investors. The situation increases the potential rental pool and rental market competition, helping maintain and raise rents and occupancy rates.
  3. Would-be buyers are risk-averse: There is just the plain old truth that many people are just too fearful to own a home in a volatile economy. Renting is seen by many as the “safer” alternative to making such a sizable investment, raising the national average age of first-time home buyers to 36 years old. Expert predictions from the early fall of 2022 were that rents would continue to rise over the first half of 2023, causing concern about renters’ ability to afford price rates. In reality, multifamily rents either remained stable or went down
  4. Younger adults prefer renting: New graduates and young professionals continue to show a preference for renting. Studio apartments tend to see the highest price growth for rental rates. In response, more units are being shared among younger tenants as they learn to navigate life outside of a school environment.
  5. Community keeps occupancy rates high: Owners might feel pressured to change up the look of a property to attract renters to maintain occupancy. This isn’t the case. Many different demographics are looking for properties, including communities just like yours. Your marketing should focus on attracting the type of tenant you want by accentuating your property’s unique amenities, location, and community characteristics.

Class A Property Investment Services: Your Partner for Profitable Investing

Many real estate investors are searching for property investment and management services in Dallas. Whether you live locally or simply own an investment property in Dallas, you need a management company that knows this city and keeps up with the changing market. 

Class A Management actively manages over 2,400 units in the Dallas-Fort Worth Metroplex. Our team offers a comprehensive menu of management services to maximize your investment growth. From feasibility to property renewals, purchases to divestitures, and all the property management in between, Class A Management has the experience to guide you to the best market opportunities. 

Contact us to see how we can help keep your property at occupancy regardless of market conditions. With Class A, the future for your property is in good hands.