It is well known that real estate can be a great investment. One of the advantages of investing in real estate is that there are multiple strategies. Often, the first thing that comes to people’s minds when considering real estate as an investment is buying a single family home to rent out. There is nothing wrong with that strategy, but a multifamily property can produce a better return on investment.

Consistent Cash Flow

Buying commercial real estate is more expensive but along with the expense there is also a solid return on investment. A multifamily property requires a larger down payment; however, acquiring a loan is typically easier for a multi-family property than it is for a single family property. This is because the cash flow that a multi-family property produces is more stable and consistent. A vacancy in a multi-family unit does not produce as strong of a disruption in cash flow as a vacancy in a single-family unit would. If a tenant moves out of a single-family home then cash flow plummets to zero until a new tenant moves in. In a multi-family unit, depending on the size, 2 or 3 tenants leaving may only affect the occupancy rate by 10 or 15 percent.

Greater impact on portfolio

If you are looking for a great way to grow your portfolio, a multi-family property is the way to go. It would take a huge amount of time and energy to acquire 30 single-family homes. One would need to work with 30 different sellers and deal with inspections and possibly separate financing on 30 individual locations. It would be much more efficient to work under a single roof with 30 units.

Hiring a property manager is cost effective

With a single-family property, it may not make financial sense to hire a property manager. This means that you must address any and all issues with acquiring tenants and maintaining the property yourself. Depending on your circumstances, that could be overwhelming. Because of the strong cash flow that comes with a multi-family property, hiring a property manager to handle all those issues would have a negligible impact on your profit margin.

Lisamarie Wand is unique in that she is licensed in residential real estate, commercial real estate, and property management. If you are considering real estate as an investment, she can assist you with any transaction you wish to pursue. Reach out to her today to discuss your investment opportunities!