Why you should invest in multifamily real estate

Many successful real estate investors learn the basics of purchasing, renovating, and establishing a regular cashflow from rental income by the acquisition of single-family homes.

But as an investor’s experience and confidence grow, many start to explore multifamily real estate investments to expand their portfolio, boost rental income, and protect against the risk of vacant properties.

If you are thinking of taking the first step into multifamily investments, read on to discover the benefits of owning a multifamily dwelling:

Generates monthly cash flow

A key reason why investors choose multifamily properties is the monthly cash flow benefits. In the right location and in a strong market where demand for housing is high, each unit will provide steady cash flow for years to come.

This makes multifamily dwellings a lucrative, long-term source of passive income for a retirement investment.

Less risk from vacancy rates

One of the biggest risks of a single-family property is the loss of income when the property is empty. No tenants means no income.

Multifamily dwellings allow investors to spread the risk of vacancy rates—even if one unit is vacant, the other units in the building will still generate income. 

Location and the strength of the market will determine how quickly rental units can be re-leased, but generally, a multifamily unit will provide access to a larger pool of potential tenants.

Scale your portfolio quickly with fewer loans

Another appeal for investors is the scalability opportunity of multifamily property investments. An investor can increase their portfolio by two or more units at a time with the added advantage of purchasing those units with one mortgage or loan.

A five-unit building will require a single loan, whereas purchasing five single-family dwellings will involve five separate loans, which can be harder to manage and track.

Property management is easier

With a multifamily building, there is only one property to visit when checking to ensure everything is maintained and up to standard. Single properties require more visits, more maintenance schedules, and more time in order to stay on top of each separate unit.

Investment diversity

The multifamily property market is diverse and offers a wealth of opportunity for investors. From a small duplex in a desirable city to a large apartment block designed for students who wish to live off-campus, there are many possibilities.

A multifamily dwelling can be leased traditionally with an annual rental contract, or it can be listed with Airbnb to provide a short-term rental option along with the potential to charge a higher premium.

Many investors seek properties that they can add value to before selling, whereas others prefer a new build or renovated property that they can lease out immediately.

With so many types of housing in this sector, the opportunity to find your niche is endless. 

Do your research before you commit

Multifamily real estate investments require a considerable amount of research before pulling the trigger and committing to a property. The top investors understand that opportunity arises from detailed insight and data.

The success of any real estate property is directly linked to its location. The best-equipped property will not attract tenants if it’s located in an undesirable location with limited job or educational opportunities.

REIndicator™ helps real estate investors amplify their knowledge in the property market. Our intuitive software provides location-based insights and data to help investors understand the key factors that drive growth and uncover additional opportunities to gain an advantage over the competition.

Real estate investors cannot afford to make a costly mistake when searching for a multifamily property to purchase. REIndicator’s software gives you the technology to make informed, evidence-based decisions on properties to help you decide when to purchase and—just as importantly—when to walk away.

Master multifamily investing with REIndicator

Whether real estate investment is your primary source of income, a side hustle, or a passive means of income for retirement, understanding the housing market is key to making a profit.

Discover the power of REIndicator’s real estate software solution to help you expand your knowledge and discover emerging real estate markets in your preferred location. We help real estate investors work smarter, not harder.