Monday, 29 February 2016

Is Multifamily Real Estate Worth the Investment? NRIA Explains

Plenty has been written about the investment potential of single family homes, but what about the potential of multifamily properties? Is it wise to go for duplexes, quadruplexes and buildings with bigger apartments or is it better to buy ‘small’ housing units? National Realty Investment Advisors, LLC is here to explain the long-term investment potential for multifamily real estate along with its biggest challenges. 

Pros of Multifamily Real Estate Investments 

Lower Rents  
It is a widely accepted fact that rents are lower in multifamily units, and hence favored by tenants as compared to single-family homes. This means a bigger percentage of people will be interested to live in your investment property. So, even if a tenant decides to leave, you will find the next rather quickly. 

More Negotiating Power 
Buying a small piece of property doesn’t give you much negotiating power. However, if you are investing in a big real estate project, then there are strong possibilities you can receive a discount. Hence, if you are planning to invest in multiple single-family homes, think about owning just one multifamily unit in a brilliant location. 

Multiple Rent Sources 
With multifamily residential, you have multiple sources of rental income. There is only one in case of single rental property. This means you will have to do without any rental income if a tenant cannot be found. In short, risk of zero income is far less if you buy a multifamily building.

Managing a multi-dwelling unit is easier as compared to managing multiple independent homes in different locations. The reason is pretty clear, tenant conflicts and maintenance will be restricted to only one location. 

Cons of Multifamily Real Estate Investments 

Management Challenges 
A bigger property needs more time in terms of maintenance. Tenant search becomes a bigger challenge as well. This is common sense, and that’s why investors who don’t have time to spare invest in smaller homes. That’s a main reason investors choose to partner with professional property management firms, like National Realty Investment Advisors LLC.    

Selling Bottlenecks  
The market for buyers of a big property with multiple independent apartments is smaller as compared to single units. So, when it comes to selling your big real estate investment venture, there are not as many takers.  
Huge Investment 
Want to invest in a multi-dwelling unit? Obviously you will have to shell out more money. The larger the investment the higher the risk and some investors don’t like it. 

This was our assessment of multi-family homes, what do you think about them? Would you go for a property that requires a big investment or stick with a smaller one? Share your thoughts below, and let’s take the discussion further.

Interested in owning a rental home for minimum cash-in? Have a look at the unique real estate offering of NRIA.  


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