Affordable Housing: Why Invest in a Multi-Family Property

0
38
Affordable Housing Why Invest in a Multi-Family Property

Buying a multi-family home may not be your first choice if you’re seeking to invest in real estate.

At first, it may seem wiser to buy several single-unit homes. Multi-family homes might not be the obvious choice but are some of the most affordable housing on the market. 

If you are serious about making money from real estate, you must consider buying a multi-family property. Here’s a look at some of the benefits you will gain by making this strong investment.

Increase Your Cash Flow

One of the best things about buying a multi-family property is that you have more units to rent. This means you will have a bigger flow of income every month. 

If you rent the property to tenants you need to create a lease. The terms that are outlined in the lease and responsibilities that you have as a landlord are usually set by the state. 

Aside from being able to collect more rent, a multi-family housing unit will allow you to have more opportunities to make extra income.

For example, you can have vending machines in strategic areas where you provide snacks and drinks for residence. Having a paid laundry facility for people who need to get their laundry done can provide an additional income.

Having these kinds of facilities can help to differentiate your multi-family property and make it more attractive to potential tenants and buyers.

Property Management is Easier 

Property management is a lot easier when you have a multi-family property, as opposed to multiple single-family homes. When you have multi single-family homes, you may find yourself in a situation where you will have to hire multiple property managers to deal with each property individually.

You will have to deal with maintenance separately as well. Having a multi-family unit enables you to keep property management and investment under one umbrella.

You Can Live There Too

If you are one of those landlords that do not mind living with tenants then you can live in one of the units and rent out the rest. This is cost-effective and will enable you to save a lot of money especially if the multi-family property is the only property, you have.

Living in the home free releases you from having to pay any rent. This will help you to save a lot more money.

Loan Availability 

When you have a multi-family property, banks and other lenders are more willing to take a chance on you because the risk is spread out across many rental units.

They know that if you are unable to collect rent from one tenant you can always collect it from others.

This is what makes you look secure to a lender. This does not mean that you are exempt from having a good credit report. It also does help if you have a significant amount for the down payment on the property.

Property Value

Real estate values tend to go up every year. The type of real estate investment that you choose will impact your return on investment

Multi-family rental properties offer multiple opportunities for rentals but they also have increased property value. Affordable living units are in high demand so multi-family housing prices are expected to continue rising.

If you have to do additions to your multifamily property or expand it in some way this can only add to the value of the property. 

Acquisition Cost

Acquisition costs tend to be more affordable when you have a multi-family property. The cost of creating acquiring a multi-family home is often less than other types of real estate properties.

It is one of the most risk-free opportunities for first-time home buyers, you will ever find. If you are thinking about applying for a mortgage or a loan to build a multi-family home, then you are likely to be pleasantly surprised by the low mortgage financing rates you will get.

As a bonus, the foreclosure rate on multi-family properties tends to be far lower. This is why lenders are more apt to assist someone who is buying a multi-family property. 

Get Tax Breaks for Affordable Housing

The government likes to give tax breaks to owners of multi-family homes. Most states give a tax break simply because the owner is assisting them by providing affordable rental facilities for people in that state. 

Of course, your property will have to meet certain expectations to be considered for a tax break.

Building an Investment Portfolio

As mentioned before, if you are just starting in real estate investment. Buying and selling multi-family properties is the best way to begin. This is because they have little risk and a fairly high return on your investment

They are a good option if you want to invest in more than one property at a time. Investing in multi-family homes means you can expand your portfolio quickly.

Buying and renting these homes is not the only option. Flipping and selling them can work well for you if you buy the right property.

Make sure that you do not need to make too many renovations on the property since this can eat into your profits when you are thinking about flipping and selling a home. Ensure also that you get a home inspection

A home that may seem fine, can have several underlying issues that will make it costly to repair. It is best to call in a home inspector to look at the walls, foundation, plumbing, and electrical aspects of the property before you close the deal.

Start Your Journey 

Investing in real estate is one of the most lucrative things you can do to increase your wealth. However, before you invest your money in these affordable housing solutions, you need to be sure that you are going to get a high return on investment.

The best way to ensure this is to do due diligence before closing the deal. Take a look at the acquisition costs, the potential the property has for appreciating, and also the overall condition of the property.

If you would like more real estate tips please check out the real estate section of the website.