Why Multifamily Rental Property Investing Is the Best Real Estate ...

My uncle and I are multi-family investors. We focus specifically on 2-4 unit multi-family house as investment property.

Investments in multifamily real estate is worth considering, especially if only at the beginning because it optimizes your cash flow by maximizing rental income and reduce costs.

Maximize rental income

Apartment building investors know that the rental income is almost always higher for multi-family houses as investment properties from single family homes. This step is crucial in today?s market.

Because they have only one source of income, many single-family dwellings is very difficult to monthly expenses (assuming you need a mortgage) to cover. Conversely, with small multi-family rental properties do not depend on a source of income, making it less risky. For example, if you have a property of 4 units and a unit becomes vacant, you are still bringing in rental income from the other 3 units. Conversely, if a single-family rental vacancy, make no income until you get a new tenant.

The bottom line is that the properties with 2-4 units role, the rent is generally 2-3 times higher than single-family homes. In addition, the effect of the vacancy is much lower. Thus, the cash flow is better.

Lowers the cost

As mentioned above, by optimizing investments in multi-family properties using cash flow because they have more rental income and a reduced risk of vacancy mentioned by several units enjoy. In the meantime, ownership costs typically be lower. In detail:

Multi-family houses are generally lower prices relative to the unit. For example, in my market, you could buy a house in a neighborhood with low incomes over $ 120K. You could buy a duplex in the same area for $ 150K. So in this example, you are essentially paying $ 120K per unit on a single home, but only $ 75K per unit of the duplex unit. Typically, the cost per unit drops more units you have in a particular property.

This is the commercial status: Any property that applies to more than four units as commercial. This is suitable for higher expenses. For example, the interest rates on business loans usually 1-2% higher than similar rates for non-commercial loans, and payment requirements are generally more (sometimes 25% or more). Other expenses such as construction, insurance, tax on the object, and water / waste water also tends to be higher.

This reduces the inspection critique: The test requirements are usually stricter for ?commercial? properties, which provides for higher repair costs and maintenance. For example, in New Jersey for a tour of the state for 5 years for all commercial properties required in addition to inspections by the local community. Conversely, NJ duplexes are not under government control.

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Most investors with a multi-dealer who has specialized in investment property group. And you should too. Ideally, your agent will be his / her own portfolio of multi-family properties, but this is not an absolute prerequisite. The bottom line is that if you want multi-family investment property, it is useful to an agent who has extensive knowledge to work in this area.

In general, the older properties offer (50 years or older) in the older neighborhoods of the largest value.

Obviously, the rent roll is strongly correlated with the valuation of real estate, and this is partly determined by the number of bedrooms in each unit. So, all things being equal, you want properties with more bedrooms. Not only rent 2-3 bedroom units command more, but they also tend to have a more stable lease. One bedroom apartments often attract a transient population, which means that revenue is generally higher.

Avoid properties with wells and sewage systems, because they could create many problems and extra costs along the way.

Focus on Multi-family detached. In other words, to avoid duplication of effort, condos, townhouses, etc., as to value these types of structures is usually not as much as individual structures.

SUMMARY

So there you have it. The bottom line is that investors, multi-family houses ?get it.? You understand that investing in multi-family properties:

Maximizing rental income through multiple revenue streams and reduce the risk of vacancy.

Minimized to avoid the expenses through a per unit cost, reduced costs and ?commercial grade? inspection, mortgages, tax and utility models.

These are the main reasons why investing in multi-family real estate is the safest and best way to your toes into the wonderful world of rental real estate investments plunge.

Source: http://www.northmetrominneapolis.org/why-multifamily-rental-property-investing-is-the-best-real-estate-strategy

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