3 Benefits to Investing in Multifamily Real Estate
Investing in real estate can be a great long-term investment that will pay you and your family for many years. If you’ve been looking at this type of investment you may want to consider purchasing multifamily real estate. Read on for three benefits to this type of purchase.
It’s a Place to Live
Buying an apartment building or other type of multifamily real estate can be a great first investment. First, you can actually live in your investment. Living in one unit and renting out the remainder allows you pay down the cost of the property loan quickly. By living onsite, the property is considered your primary residence, giving you access to mortgage rates usually only available to people buying private residences for themselves.
You Have Less to Lose With a Vacancy
As you are building your wealth an apartment building also means you can have vacant units without losing all of your rental income. If you buy a single home to rent, any month that property is not rented you’re paying the mortgage and losing any excess income you charged over the mortgage amount. You should plan that you will have to leave a property empty for at least a month when a tenant moves out to prepare it for a new tenant. With apartments, you’ll lose only a part of your monthly income. Until you have a strong base and can live without a month’s rental income, apartments are a safer investment.
Lower Maintenance Costs
Another benefit of having multiple families at a single address is grouped maintenance. This means that you can pay for water and sewer yourself and spread the cost out across all tenants, leading to a lower price point. While you have multiple renters you still only have one roof, yard and parking area. Many multiunits also have a single HVAC and boilers as well. Yes, it can still be expensive to do maintenance on those items, but there’s only one to take care of while you take in multiple rents. The only other way to collect from multiple tenants is multiple discrete properties which all have the potential to have these maintenance costs, sometimes simultaneously.
Some investors will be scared away by the greater upfront cost of buying multifamily real estate, but when you consider the benefits and the potential for having a much better loan rate, it makes sense to start investing here.