In multi-unit investment or investing in apartments, the number of tenants is more as compared to single-family units. Therefore, the amount of cash flow is much greater as well. This helps to pay off the mortgage on the building much faster. Even for the maintenance work, with all the people paying, the money is pooled together. This makes it much easier to take care of the maintenance work of the tenanted premises. Since the payout by the tenants each month is big, it always ensures money left over, which is available for reinvestment.
It is best to create a strategy and acquire a multi-unit to house four families. This would fall in the eligibility criteria for getting a residential mortgage and would give the advantage of lower interest rates. By increasing the number of properties through multiunits, the level of income increases. You could hire the services of management companies to take care of the properties, remaining free from any direct contact with the tenants. The option is profitable in terms of retail, wholesale and lease, as compared to single-family houses.
There are a number of advantages to investment in multiunit houses, over single-family houses. The first advantage is the greater cash flow. The simple reason is that there are more tenants and so the rental amount generated is more. Another reason is that it cuts down your risk. For example, if you have three tenants living under one roof, even if you lose a tenant, you still have two to contribute towards the rent and take care of the expenses incurred. But, in the case of a single-family unit, you lose the full rent until you manage to re-rent the property, which in many cases could be equal to or more than your profit for the whole year. The cost of maintenance is also considerably less for multiunit buildings than for single-family houses.
Six single houses would require replacement or repairs of six roofs and six lawns, spread all over the city. Whereas on a multiunit, you would have just one roof and one lawn to be maintained, making the maintenance economical. Even the acquiring of a multiunit is much easier, as everybody seems to be interested in getting hold of single-family houses and hence there is much less competition. Competition drives the prices of single-family houses. Depending on market conditions, multiunits would be comparatively cheaper than single-family houses.
Triplex or duplex houses may be available for approximately the same price as a single-family house, but would earn you rent from two tenants with the same amount of mortgage payment. This boils down to positive cash inflow, which is of prime consideration in real estate investing. Most of the smart real estate investors have multiunits in their portfolios, along with single-family houses, which create a much better portfolio. Your cash flow will be larger, allowing you to hire professional services to manage your properties and tenants. This leaves you with enough time to concentrate on other important business.
Investing in multiunit properties is an option that offers much higher returns, as compared to investment in single-family units. Smart real estate investors make sure that the multi-units are a part of their portfolio, along with single-family units.