Are you thinking about getting started in real estate investing but you’re not sure if you should invest in multifamily vs. single-family properties?
This is an understandable question to have because of the simple fact that in today’s world single-family real estate investing is positively portrayed on television and most investors think that they should invest in single-family homes instead of multifamily properties.
Single-family investing is a smart choice for some investors but 7 amazing benefits come with investing in multifamily properties.
Benefit #1 – Economy Of Scale
The first benefit that comes with investing in multifamily properties is economy of scale.
Webster’s dictionary defines economy of scale as “a proportionate saving in costs gained by an increased level of production” and this is especially true when it comes to investing in multifamily properties.
When an investor owns one multifamily property, they will enjoy huge cost savings because all of their rental units are under one roof. Contrast this to the investor who owns multifamily single-family properties across the town and it’s easy to see that the multifamily investor has an easier economy of scale than the single-family investor.
Why? The answer is simple. An investor who owns one multifamily property has all of their rental units under one roof, as well as their maintenance and other expenses.
An investor who owns multifamily single-family properties has all of their rental units spread out at various locations across town or their state, and they have to pay separate maintenance crews to manage problems and maintain their properties for them.
Benefit #2 – Less Risk Than Owning Multiple Single-Family Properties
Another fantastic benefit that comes from owning one multifamily property vs. multiple single-family properties is that an investor has less risk owning one multifamily property compared to the investor who owns multiple single-family properties.
How? Let’s say that an investor owns a fourplex, when one of the units in their property is vacant, they will still be earning income from the other units in their property. This offers an investor peace of mind in knowing that their property is generating more than enough income to cover their expenses.
Real Estate investors who own multiple single-family properties don’t have the same peace of mind because when one of their rental properties is sitting vacant, they will be faced with having to pay for the mortgage and expenses that property has until they can fill that vacancy.
Benefit #3 – Less Competition From Other Investors
Thanks to the popularity of real estate investing television shows, many investors are entering real estate investing to fix and flip properties. This makes real estate investing as a whole more complicated for investors because more investors are competing over single-family homes.
The good news about multifamily investing is that there’s less competition from multifamily investors because of the simple fact that many investors don’t invest in multifamily because they think it’s a niche that’s too difficult to get started in.
With fewer investors competing over multifamily properties, this means that it’s easier for an investor to get started investing in multifamily properties, especially if their goal is to start small by investing in a duplex, triplex, or fourplex.
Benefit #4 – The Most Efficient Way To Build A Large Portfolio Of Rental Units
Let’s face it, investing in multifamily properties is the most efficient way to build a large portfolio of rental units because with one building it’s possible to own 25 units at one time.
The same can’t be said when it comes to investing in 25 single-family properties because it’s going to take you time, money, and effort to source, acquire and manage those single-family homes.
Benefit #5 – Multifamily Properties Are More In Demand Than Ever Before
In 2021, we live in a nation of renters, and more people than at any point in history want to live in multifamily properties because they offer the location, amenities, and convenience that often can’t be found living in single-family homes.
Benefit #6 – High Appreciation Rate
It doesn’t matter if you invest in Class A, B, or Class C multifamily property, the average multifamily property often holds its value over time compared to single-family properties, especially if you make improvements to the property.
Some of the most common improvements that you can make to a multifamily property include adding on-site storage, laundry facility, garages, or renovating the individual units that the property offers.
Benefit #7 – Tax Breaks
Last of all, but most important, are the tax breaks that multifamily investors enjoy.
Some of the most common tax breaks for multifamily investors include depreciation, cost segregation, and passive income tax benefits.
Contact Trier Capital
At Trier Capital we specialize in sourcing, acquiring, and managing multifamily properties for investors nationwide.
Our simple step-by-step process allows you to accelerate your wealth creation so you can live a magnificent life on your terms, whether that means traveling the world, spending more time with family and friends, or making an impact.
If you’re an accredited investor who is ready to invest in multifamily properties, contact me today by calling (630) 229-2383 or click here!