Are you planning on investing in real estate this year? If so, you may be debating if you should invest in single-family homes or multi-family properties.
It’s understandable that you may have questions about where you should get started because in today’s world many investors advocate investing in single-family homes while others will suggest that you invest in multifamily properties.
There’s no doubt that in 2020 the general consensus is that a Real Estate Investor should get started by investing in single-family homes, especially a fixer-upper property, because when you turn on the television and watch channels like HGTV, investing in Fixer-Upper properties is highly glamorized compared to investing in multifamily properties.
Even though single-family investors, especially those like Chip and Joanna Gaines, who are well-known for investing in single-family homes, receive the most press and attention in 2020, the reality is that if you want to get the best return on your real estate investment you should consider making your first investment a multi-family property.
Why invest in multifamily properties?
Does the thought of investing in a multi-family property put “butterflies” in your stomach? If so, you’re not alone! The reality is that investing in a multi-family property isn’t as hard as many investors make it out to be and you will actually get a better return on your investment when you start with multi-family vs. single family.
More doors equal more income – The first reason that you should consider investing in a multi-family property vs. single-family home is the fact that if you have more doors under one roof, you will enjoy more income compared to the income that you would enjoy if you were to invest in just one single family property.
Efficiency – Another great reason to invest in a multi-family property is that apartments, duplexes, triplexes, and other multifamily properties are easier to maintain than multiple single-family properties.
Think about it. If you have 3 single-family homes, this means that you have three separate properties with their own individual issues, compared to let’s say owning a Triplex, where all of your maintenance issues are going to be under one roof.
Time is of the essence when you are a real estate investor and it makes more sense to have all of your investment properties consolidated in one area versus having to drive around town or catch a plane flight out of state to visit each of your single-family rentals individually.
Demand – In 2020, multi-family properties are more in demand than ever before thanks to the fact that we have multiple generations choosing to rent multi-family properties versus single-family homes like they may have in the past. Today’s generation of multi-family renters includes Baby Boomers, Generation X, and also the Millennial generation, so there literally will never cease to be a demand for multi-family properties among eligible renters for the foreseeable future.
Besides having a demand across multiple generations of renter’s, multi-family properties also continue to remain in demand especially when they are located close to major areas of employment.
Most renters in today’s world want to live close to where they work so that they can cut down on their commuting costs and be home earlier in the evening to spend time with their families rather than having to commute long hours to and from work every single day.
House hacking potential – Another benefit that comes from investing in multifamily properties versus single-family homes is that you have the ability to house hack, or live in the multifamily property that you purchase.
This is a huge benefit because, with most single-family properties, house hacking isn’t as easy because you can only rent out a room at a time to a tenant in your home.
When you own a multi-family property though, you will have the ability to live in one of the units yourself with your family, and have your own separate home, while you rent out the other units the property has to offer. Doing this will help you to also eliminate or reduce your monthly mortgage costs while earning passive income for you on a monthly basis.
Easier to manage – Let’s face it, another benefit that comes from owning a multi-family property is that they are also easier to manage either by yourself or, for a property management company that you choose to manage your investment property for you.
Often easier to finance – We’ve offered you a variety of reasons so far that you should consider for investing in a multi-family property but one of the best reasons why you should seriously consider investing in a multi-family property is that they’re often easier to finance in the single family property.
The reason why multifamily properties are easier to finance than single-family is that lenders like the fact that multifamily properties generate more income than single family properties and the income can also be increased with the rents are raised.
Multifamily Real Estate Investors also enjoy higher loan-to-value ratios as well as lower debt service coverage ratios compared to a single-family Real Estate Investors.
If you’re not able to finance your multifamily deal, thankfully there is a wide variety of crowdfunding options that are available to you in 2020. Some of the most popular crowdfunding platforms include Fundrise and Realty Mogul.
Partner With Me To Get Started Investing In Multifamily
2020 is shaping up to be another excellent year for investing in multifamily real estate. If you’ve been seriously thinking about investing in multifamily, and are an accredited investor, but you don’t have the time or energy to get started with investing in multifamily yourself I invite you to contact me.
I’m currently invested in more than $79,000,000 worth of real estate across three states. As a longtime multi-family real estate investor I’m searching for the right people to work with who are serious. building a substantial portfolio of multifamily properties.
To learn more about partnering with me please click here to fill out my contact for him on the next page. I look forward to the opportunity of speaking with you!