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.
Multi-family housing is recession-proof
Despite high-profile news stories about renters being unable to pay their rent during the pandemic, the National Multifamily Housing Council recently reported that more than 80 percent of apartment renters were current on their rent in March, and those numbers have been steadily increasing. When you also consider that current interest rates are at an all-time low, it seems that buying multifamily properties could be a good hedge against hard times.
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.