SINGLE FAMILY VS. MULTI-FAMILY RENTALS:

Which is the right real estate investment for you?

People usually say that multi-family investment is expensive and there is a myth surrounding real estate investment when it comes to this type of investment.

Talking about multi-family apartments, we refer to a minimum of twelve tenants paying for an apartment. So, how do you then analyze a multi-family real estate deal? In order to do this, it is important to know the difference between a multi-family and a single-family investment.

A single-family property has a single-tenant, whereas a multi-family property hosts more than one tenant. Single-family properties typically include houses, while multi-family properties are often apartment buildings or condominium communities. In order words, A single-family apartment comprises of one or two tenants paying the landlord while the multifamily apartment has to do with a large volume or number of tenants that gives you the opportunity to get your money back on time.

Which is the smarter investment is the subject of considerable discussion in the real estate world. The bottom line is that there isn’t one clear choice for which option is better. It depends on the investment opportunity and your goals as an investor.

However, the aim of this article is to enlighten the reader on why the rental income deal of multifamily investment is better than its counterpart. Here are the advantages of multi-family apartments.

1. CONSISTENT INCOME

You have more access to cash flow when you invest in multifamily assets than in a single-family apartment. For instance, if you have 50 million naira and build a seven-bedroom duplex, it is likely that you aren’t going to get back your capital until about 20–25years due to the fact that you might have a tenant who won’t be able to pay or who is going through financial stress and then the tenant may have to move out of the apartment. But when it comes to a multifamily apartment, you can be maintaining one part of the building while earning rent on another part of the building. It also gives you protection because of the volume and high demand it brings.

2. EASY ACCESS TO LOAN FROM FINANCIAL INSTITUTIONS

Most financial institutions are profit-oriented based. Therefore, they easily release funds for projects that will fetch them money. Multifamily apartments project is one of the deals that attract financial institutions due to the return on investment in it. In other words, As a developer who is not buoyant financially, the bank can fund your real estate investment when buying a multifamily asset than when building your own apartment.

The government also can partner with you because of the volume you can provide for the masses. You will also have private investors who are willing to finance your real estate projects when it has to do with multi-family housing than when it has to do with single-family assets.

4. LEVERAGE ON DOWN PAYMENT

When it comes to multifamily assets, people or tenants will pay you ahead of time for the property. This means that with your down payment, you can start making money from your property. You don’t need to put yourself under immense pressure. Your concern as an investor is how to raise the first down payment when it comes to multifamily assets.

5. HIGH APPRECIATION RATE

Even when you do not enjoy immediate cash flow on your multifamily property, they still hold their value. And, that value increases over time. This is true with most real estate properties but the appreciation rate is higher with this type of property. The appreciation is not guaranteed, though.

Next, if you want the value of your property to get a boost, make sure that you maintain it. When your property is well-maintained, you can offer a good rental price on the property, which drives more potential renters.

6. EASIER TO MANAGE

It is easier to manage 12 units in one roof than it is to handle 12 different rental units spread throughout the city. This is a practical reason that makes multifamily property investment makes a lot of sense. Also, it is a type of investment that would justify hiring a property manager.

If you own just one property or a rental unit, hiring a property manager might not make a lot of sense, especially if you consider the cost of hiring an expert. But with a multifamily property, you will be able to optimize the investment on a property manager.

7. MONEY MAKING MACHINE

A lot of the time people who buy single-family apartments get discouraged because they are not making money from it due to the low volume and then they are less motivated and inspired to do more of the investment. With the multifamily apartments, you keep on getting credit alerts monthly or yearly from your tenants.

In conclusion, you need to think in terms of using leverage especially when starting. By using leverage, you make your money work for you. When you buy a single-family investment, it is like keeping money under your pillow and expecting the money to multiply. It is not going to work. What you need to do is to put the money in an asset for it to grow and eventually, generate cashflow.

To know more about Middlechase Property Limited, click on the link below: Middlechase Property Limited or call 08186577504.