If the stock market, with its dramatically sharp rises and heart-stopping dips, is beyond your risk tolerance, you might do well to consider multifamily real estate investment instead. There are a number of strategies that can bring you wealth with multifamily housing, from flipping to maintaining a profitable portfolio of properties as rentals, and more. Although it may seem simpler to begin with single family home investing, multifamily apartment buildings offer interesting advantages, including:
- Better chance for loan approval and lower rate: Lenders like multifamily real estate deals due to the incremental monthly rental income the rentals provide to the mortgage holder (you), along with longer-term property value gains. (You’ll enjoy these advantages even more than your lender will.) For the lender, the risk of default and foreclosure is lower, since owners typically have only a small percentage of units empty at any time.
- Portfolio growth is simpler and quicker: Buying several single family homes is time consuming, complex and costly. Purchasing several homes to create your portfolio means multiple inspections, multiple seller negotiations, multiple mortgages, etc. Alternatively, you’ll gain many units immediately, when you invest in a single apartment building. You can grow from there.
- Hiring management is affordable: If you begin with single family properties, you may need to manage them on your own initially. Paying a management fee may not make sense, because until you own multiple rental homes, the management fee would eat up your profits. With an apartment building, you can justify hiring professional management right away. This way, you’re free of the day-to-day details such as processing rental applications, scheduling repairs and dealing with evictions when needed. You can use your free time to keep your eyes open for new properties to acquire, and grow your portfolio.
These are the most compelling reasons commonly cited for getting into real estate investing in multifamily apartment complexes. For funding to help build an impressive and profitable multifamily real estate portfolio, contact Flex Capital today.
