Why it makes more sense investing in multi-family over single-family

Real estate investing is one of the most lucrative ways to increase your wealth and become financially secure. However, deciding where to start can often be a struggle. You might be wondering what you should buy, what investment opportunities you should consider, and what asset would be the best addition to your portfolio.

Multi-family rental properties are much better investment opportunities than single-family homes for a number of reasons.

strong>Higher Cash Flow

Multiple units mean multiple tenants and a higher cash flow. If the tenant is a little behind on payments, you would still have income from the other units. If one of the units is vacant, the others are still paying, and you can easily manage your expenses.

Often, owners occupy one of the units in multi-family housing, and living expenses are completely eliminated too.

strong>Economies of Scale for Maintenance and Expenses

As a multi-family rental property owner, you could also have access to significant economies of scale. This is a great help when it comes to maintenance and repairs.

For repairs, you could conveniently negotiate a lower rate from contractors and vendors. For instance, if they know you have multiple properties and all of them would need repairs and services at some point or the other, you have a higher chance of a discount.

You could also plan renovations beforehand and get more than one unit repaired at the same time. This would save you trip charges and would result in a lower maintenance bill.

strong>Lower Insurance and Marketing Costs

The costs for marketing and insurance for each unit would be lower than what they are for a single-family home. You would be paying less for it because the costs would be divided amongst several units, rather than just one.

strong>Easier Financing Through a Commercial Mortgage

Investing in a multi-family property also has financing benefits. Getting financed might be easier because you would be making use of a commercial mortgage instead of an investment loan or traditional mortgage, which is generally used for a single-family home. Most of this depends on a few factors:

• The down payment amount.
• How strong your credit history is.
• Any other assets you might own.

It is also dependent on where you are financing your purchase. However, most investors find it easier to finance a multi-family property. Often, the rental revenue also helps you negotiate better terms.

strong>Lower Property Management Fees

Another major benefit of choosing multi-family homes as an investment is the lower professional management fees because they are managing several properties at the same time.

strong>Rental Demand Remains Strong

Multi-family homes have an edge when it comes to tenant demand. No matter how bad the economy is, people still need a roof over their heads. Not just that, but apartment development has recently gained more popularity than condos.

Baby boomers are not interested in owning property, while millennials are delaying or abandoning plans to buy homes. Generation Z, the youngest of the lot, is coming into the housing market with a preference for rental.

strong>Scale Faster

Let’s assume you want 10 units added to your real estate portfolio. If you choose single-family homes, you would need to look for 10 different properties having 10 different sellers, requiring 10 different inspections, as well as 10 different mortgages. By comparison, a multi-family home with 10 units could give you all of that in just one deal. It is a lot less hassle as compared to the same number of single-family homes.

Investing in multi-family rental property is much more lucrative than single-family homes. With all the benefits we have mentioned above, you will definitely be making a profit soon.

Amalfi Capital is a real estate equity firm founded in 2015 that is an investor in over 1 million square feet of property throughout the United States. Amalfi focuses on expanding its portfolio by partnering with highly experienced sponsors who are experts in their respective markets by investing in commercial & industrial assets that we believe are well positioned for above market returns over the long run. Amalficapital.biz – amalficapitalinfo@gmail.com