As its name suggests, multi-family real estates are buildings that have more than one space available for rent. Also known as apartment complexes, they can bring a number of advantages when it comes to an investment. Here are some of the top reasons why you should choose to invest in a multi-family real estate as to a single-family unit.
Takes Less Time to Grow Your Portfolio
Multi-family real estates are ideal for property investors that want to build a considerable larger portfolio of rental properties. This is because as compared to acquiring 10 different single-family homes, it’s significantly easier to purchase a 10-unit apartment building and also a lot more time efficient.
If you were to choose to buy 10 different single units, you’d have to work with all 10 different sellers and arrange all 10 house inspections at their various locations. Sometimes, the investor would also have to open up 10 different loans for every property which could have been simply avoided by buying a single property consisting of 10 units.
More Costly, but Significantly Easier to Finance
More often than not, it will be more expensive to acquire an entire apartment building as compared to buying multiple single-family homes for investment purposes. The cost of a single multi-family building can easily cost upwards of $1,000,000 but a single-unit can cost as little as $30,000.
Of course, at first glance it probably seems that securing a loan to buy a single-family unit would be a lot easier but it couldn’t be farther from the truth! In fact, multi-family homes are likelier to get loans approved by the bank simply because the estate can generate a stronger cash flow each month, even if the building has some vacancies. This means that buying a multi-family proposes a less risky investment for the lender and can often lead to a more favorable interest rate for the borrower.
Property Management Makes Financial Sense
Many real estate investors don’t like actively managing their properties so they choose to hire a property management company to handle the rentals. Typically, the property manager is paid a small commission from the monthly income generated from the rentals. Their duties include collecting rent payments, property maintenance, finding or screening tenants and handling evictions.
Owners of single-family homes don’t have the luxury to engage with a property manager as it wouldn’t be a wise financial decision due to the small portfolio.
Work with A Quality and Experienced Realtor from NJLUX Real Estate
If you’re looking to sell your luxury home in the area of New Jersey, NJLUX Real Estate can help you! We are a premiere resource for luxury homes with a specific focus on only listings within Bergen County and New Jersey. Those who want to buy can also easily search for homes that best matches your needs, according to price drop percentage, price, lot size and more! Do check out our recent listings keep up to date with the latest market prices for the particular area or size.
