When it comes to real estate investing there are many ways to try to turn a profit. Multi family property investing is a lucrative option for real estate investors in Florida. Luxe Crowdfunding can help you fully understand the benefits of investing in multi family real estate properties to get more cash in your pocket.
Defining Multi Family Real Estate Properties
Multi family investment properties contain several separate residential units for tenants within one building. Although the size of multi family investments can vary significantly, they are broken down into two classifications. Small multi family invests consists of two to for units. Large units are any property with more than five units. Apartment buildings are the most common type of multi family investment property.
Benefits of Multi Family Property Investing
Each type of real estate investment has its advantages. These are the top five advantages of investing in a multi family property.
- Higher Return on Investment
Regardless of the type of real estate investing you are interested in, the number one priority is making money. With multi family properties, rent collected from multiple tenants generates higher positive cash flow. Ultimately, a steady positive cash flow leads to a higher rate of return on investment.
- Easier to Finance
Despite the fact multi family properties are more expensive, single-family homes are more difficult to finance. The positive cash flow of multi family properties is more appealing to banks and loan lenders because they can guarantee the rental income will cover the loan payments. This allows real estate investors to have smaller down payments with more options for financing. One loan covers multiple units instead of needing one loan per single family home.
- Less Competition
Most real estate investing revolves around single-family homes. Therefore there are fewer real estate investors in the multi family market. This makes less competition when buying a property. For this same reason there are fewer candidates for lenders to choose from and securing a loan becomes easier.
- Less Risky
Real estate investors of multi family properties worry less about vacancy as it’s improbable to get a 100% vacancy rate. If you’re looking at investing in multi family properties, focus your attention to markets where people would rather rent than buy, creating a high demand for multi family units. This ensures you’ll always have prospective tenants available.
With multi family units, even if there’s some vacancy, there’s still less risk of generating a negative cash flow. For example, if an apartment building has 20 residential units, and 4 of these units are vacant, you’ll still be able to make money from the rent collected on the 16 occupied units. On the other hand, with a single family home, if you don’t have a tenant, you have 100% vacant and are immediately losing money on your investment property.
- Insurance is Easier to Acquire
When purchasing insurance for a multi family property, you don’t need insurance for every unit as is the case with single-family homes. You are able to buy insurance for the entire property. An entire apartment complex or building can be covered under one single insurance.
Hear more about multi family property investing from the experts at Luxe Crowdfunding in Florida. Call us today.