Investors who are interested in investing in multifamily properties should become acquainted with the basics of this type of investing. Most investors start by familiarizing themselves with exactly what multifamily investing is. Once they have a fundamental understanding of what this investment entails, they can weigh the pros and cons of this type of investing to determine if it’s right for them.
What Multifamily Investing?
First of all, to understand what multifamily investing is, you should first gain an understanding of what a multifamily property is. The definition is quite simple. A multifamily property is simply a property with more than one family living in it. Examples of multifamily properties are apartment complexes. A multifamily property has several units. These properties can be huge and expansive or small with only a few units. However, large or small, these units house more than one family. These units can be as small as a duplex with a mere two units or as large as a 200 unit apartment complex or larger. However, the term family is generic, Families can constitute roommates, actual families, or couples.
The Pros and Cons…
On the upside, multifamily properties are easier to finance. Most likely, this is the case because multifamily units house many people which makes cash flow more likely. If you lose one tenant you still have several others. For the most part, the income is passive and expansive. Because you have more than one tenant your ability to grow your business and revenue is elevated and much easier than that of a single-family home which you acquire one by one.
There are obvious cons when it comes to multifamily investing. The first is the increased initial expense in investing in a multifamily property. Plus, there’s a lot of competition when it comes to finding properties. Also, once you find one to invest in you will have a lot to manage. Each tenant represents an individual responsibility in terms of the maintenance and upkeep of the tenant’s unit.
Multifamily investing can be very lucrative for investors who want an asset with a lot of money earning potential. It’s the equivalent of owning several properties in one. However, potential investors should explore the pros and cons as well as gain a fundamental understanding of what multifamily investing is before moving forward.