Why invest in Multi-family properties?

1. Cash Flow

Your monthly cash flow will always be greater in Multi-family as opposed to single family investments if purchased at market value.

The more unit you have under one roof, the less risk you take on. When you lose a tenant in a single family property you lose 100% of the income.



2. Economy of scale

If you have six single family houses opposed to one six family, you have six roofs to be replaced or repaired, six lawns to be maintain, six tenants spread out through out your city or town

In your six family you have one roof, one lawn and your tenants are centrally located. Economies of scale are in your favor.

3. Less competition

There’s a lot less competition than there are in single family houses. Why? Because no one is out there teaching how to do it and all the single family guru’s make flipping single family houses sound as easy as chewing gum. The smart investors put multi-units in their portfolios along with single family houses.

4. Property management- the operation, control, and oversight of real estate.

With the bigger cash flows, you can afford to hire management companies to manage your tenants, thus eliminating that hassle. The thought of having to deal with tenants at all hours of the day is why most people do not invest in real estate.

5. Debt Reduced by property income

The debt on the property will be reduced by the income of the property’s net operating income, NOI. NOI is figured by the gross income less all expenses before debt. The NOI will sufficiently fund the debt payments thereby reducing the debt balance and creating equity.

6. Multiply Asset Value through Leverage

Another important characteristic of commercial real estate investing is the ability to place debt on the asset which is several times the original equity. This allows you to buy more assets with less money and significantly multiply asset value. $100,000 can buy $300-$400k in property.

7. Appreciation of Asset Value

Income producing Real Estate Investments have historically provided excellent appreciation in value that meet and exceed other investment types. Properties historically increase in value as the net operating income of the property improves through rent increases and more effective management of the asset.

While no one can ensure the future of rents or income properties’ values this asset class seems positioned to continue to benefit from a number of other social economic issues that I will save for another time.