Do you want to finally get into investment properties? Are you confused and unsure about what kind of investment property you should get? Multi-family investment properties are a great way for real estate investors to grow their wealth while mitigating the majority of investment risks.Multi-family investment properties are a powerful and effective strategy to grow your money. It's the only kind of investment that will provide you with a consistent cash flow each month. Have you heard that before? That's a good reason to consider purchasing a multi-family building, but that's not the only one.
5 Reasons to Choose a Multi-Family Investment Property
Does the prospect of owning a multi-family investment property scare you to death? The idea can seem intimidating, but there are just too many benefits to ignore.
1) Opportunities for more cash flow: Owning a multi-family property will generate you a lot of income because of the multiple units. Beyond rent, you can make more monthly income by improving the infrastructure of the units. If you add a laundry room with coin-operated machines, you'll be able to charge more rent for your units, and you'll make additional income from the laundry machines. If you create one-bedroom units dedicated to transient tenants, you’ll get more income there, too.
2) Multi-family makes property management a breeze: In an apartment building, you may have 12 individual units. Here, they are all in one place, which makes it easier for you to manage and service. Imagine owning 12 different single-family investment properties around the city. That sounds like quite the headache, right? That's 12 different properties you have to drive to, inspect, and manage. Why not have those under one roof? You'll be a more efficient landlord.
3) This investment won't lose value: The biggest advantage of multi-family investment properties is their ability to attract tenants. If the building is in a great location surrounded by attractive amenities, you'll attract tenants like flies to honey. If your apartment is averaging 70-90% occupancy rate, you're generating a massive income. If you can continue to attract tenants on a consistent basis, you'll also start to attract investors, and when you go to sell the investment, you'll see nothing but dollar signs.
4) Easier property appreciation: Many real estate investors rely on property appreciation to make more money from their investment when it sells. However, this tactic doesn't always pay off. For a property to appreciate, the market needs to be taken into consideration, along with any renovations you've completed to benefit the tenants. With a single-family home, your options are limited. You can repaint and renovate the entire house to force appreciation, but keep in mind that you're only doing it to one home.
Instead, imagine doing all that work to 12 homes. In an apartment building, everything you improve and fix will force appreciation exponentially. Compared to a single-family home, this fact is one of the strongest investments points of a multi-family property.
5) You'll get tax breaks: Governments like the idea of providing homes for people, and your clean, affordable, and safe housing contributes to that. Since you are running a business, you are eligible for a whole bunch of tax deductions and incentives.
In a multi-family property, you can depreciate several things, which can take effect for more than two decades. The size of your building will also affect your incentives. To get as many deductions as possible, it's imperative that you get a knowledgeable CFO to assist you. They'll help you pay minimal taxes.
Are multi-family investment properties starting to look more attractive to you? They should be. They have a lot of advantages that single-family properties don't. If you purchase a multi-family investment property, you'll have more opportunities for cash flow, an easier go of property management, it won't lose value, it will appreciate faster, and you'll get tax breaks.