Real estate investors often prefer to invest in single-family homes because they feel a single-family home holds its value, it can demand higher rent and they only have to deal with one tenant. A multi-family home is a 2-4 family residence and there are advantages to owning this type of real estate that far outweigh single-family rentals.
Multiple Income Streams
Multi-family homes offer more than one income source with multiple tenants which provides some stability to the owner should one unit be vacant or one tenant default on their rent. With a single-family home, if the property is vacant or the tenant does not pay, the owner is stuck handling the expenses on his own.
Cash Flow
Investing in a multi-family is one of the most powerful real estate investment strategies that a person can use to create consistent cash flow each month. The rents that come in minus the expenses should provide a profit each month. Often a three or four-family home could still provide a profit even if one of the units is vacant. Normally a single-family home will only break even for the first couple of years with rent, upkeep, and expenses.
Easier to Manage
One of the advantages of buying a multi-family home is that it makes it easier to manage the property rather than having several homes spread across the city. The expenses are less as well since there is only one roof, one exterior, one yard, etc.
Holds Their Value
Maintaining the multi-family home will not just make it attractive to tenants but it will also allow an investor to increase the rents which will increase the owner’s cash flow. It will also increase the value of the property since a rental property’s value is determined by the amount of income it produces.
When looking for a sound real estate investment, an investor cannot go wrong with a multi-family home. Be sure to consult a Realtor® to help you find multi-families in your area, assist you with calculating the income and expenses, and determine the perfect investment for you!
