When it comes to real estate, a person can invest in 2 major types of properties, single-family, and multifamily. As the name states, multi-family buildings are the buildings that have multiple rentable spaces while the single-family properties have only one unit to rent.
Multi-family residential is a classification of housing where one building or several buildings contain a number of separate housing apartments for residential inhabitants. An apartment building is a common form of multi-family residential.
Multi-family residences are incorporated by many international communities such as co-housing projects.
There are many benefits of investing in the major residential complexes while building a portfolio for small homes have fewer barriers to entry. Here we are going to show you the reasons that make a multi-family investment better than the single-family investment.
More money but a lot easier to finance
In most cases, the cost of purchasing a single-family home will be significantly less than the cost of acquiring an apartment building. An investor could have to pay as little as $30,000 for a one unit rental while the price of a multi-family property may go up to millions.
You might have heard from many people that securing a loan for a single-family home will be much easier than a million-dollar complex, but the truth is that the banks prefer approving the multi-family property for a loan than the average home.
The reason is that the multi-family property brings a healthy cash flow every month. The situation remains the same even if there are tenants in the property who are late with their rent payments.
For instance, a property would become 100% vacant if a tenant moves out of a single-family home. On the contrary, a property that contains 10 units with 1 vacancy would only be 10% unoccupied.
Investing your money in a single-family property cannot help you increase your investment as fast as a multi-family property can. You can purchase a property in an expensive area with the loan that you get from the bank while in the single-family property, you do not get enough loan to buy a property in an expensive location.
A multi-family property produces higher rents as compared to single-family property. A single-family property can accommodate only one family while a multi-family property has the ability to accommodate more than one family.
As a result, a multi-family property can bring you higher rents than a single-family property.
We highly recommend you to purchase a multi-family property if you want to grow your investment significantly.