The real estate market is finally cooling down, which is great news for anyone who’s been considering investing in multifamily real estate! If you’ve always wanted to get your hand in this complicated yet rewarding area of property investments, it could be your time.
These are the pros and cons of this type of investment and why it might be the right choice for you!
Pro: Long-Term Income
One of the best parts of owning a multi-residence piece of property is that you have an income for as long as you need it. People will always need housing, and you can offer them it at rates that will pay off your mortgage on the property while still making an income for yourself.
This perk is what draws most people to multi-family home investments, and it brings a huge return on that investment.
Con: Mail and Package Management
Residents want to know that their mail and packages are going to be safe. Nothing is more annoying than going to collect your new box and realizing someone stole it from your doorway before you could get there.
The best way to avoid this is to get a multifamily property fixer-upper that leaves you room to build a mail and packages room into it. This will create a secure way to receive their mail while giving you peace of mind that they won’t suffer from theft.
Pro: Create a Community for Tenants
Community is difficult to find in the 21st century, but as a property owner, you have the chance to give back to the city you live in and create a community from the roots up. From common areas where people can gather with loved ones to adding a media or working space that allows tenants to complete their quiet work-from-home projects in a business-minded room, there’s a lot you can do to make them feel at home.
This work pays off because it means people will pay more to stay there and that they’ll be more invested in staying in your property for longer.
Con: Deal With Noise and Neighbor Complaints
One of the most time-consuming parts of owning a multi-family residence is that you can’t stop people from picking fights or getting annoyed with each other. There’s an ongoing joke in popular media that upstairs neighbors are clog dancing and bowling on the floor every single night, and a large number of property owners agree that noise complaints are the most common issue.
To take care of this, make sure you build with lots of insulation. This means in-floor, in-wall, and going above and beyond the basic building code insulation requirements. Take your time to soundproof the building as much as possible.
Pro: Have the Property Pay For Itself
This was briefly touched on before, but it can’t be made clear enough that your tenants will be effectively paying for the mortgage on your property. With how steep property costs are and how much you have to pay to invest in this business, it’s nice to know you’ll immediately be making money to cover it.
Try to calculate rent so it at least covers the monthly costs of the building, and then factor in what the local rates are. After the property is paid off, you can sell it or keep renting it out and make a pure profit.
Con: Keep On Top of All Renovations and Maintenance
Renovations are a big deal! People want to be comfortable and feel like they’re getting their money’s worth. This can be expensive. Beyond that, you will also be in charge of making sure all maintenance is covered and completed.
If you live in an area with extremely hot weather, you’ll have to look into getting a good contract with an air conditioning company. Renters want the best temperatures for apartments in summer and don’t want to deal with the wait or stress of their HVAC system crashing.
Is It The Right Fit For You?
If you’re still on the fence about this, you’re not alone! Many people struggle with deciding whether or not they want to be a landlord or simply invest in a rental property. The important thing to consider is whether this is the investment that makes sense for your finances and where you see yourself in the future. Owning this property for at least ten years will allow you to see major kickbacks in income. Is that feasible for you?
If you’re unsure about the work of managing it, there are plenty of management companies that would be happy to take that stress off of your shoulders!
Invest In The Best Way Possible
Investing in a multi-family residence is the best way to make great money over a long period of time. Whether this is your first investment or you simply want to make sure you do it right, consider reaching out to Properties in Silicon Valley to create the multi-family residence of your dreams.
Sam Willis is a freelance writer that loves sharing his knowledge and expertise in residential and commercial real estate, as well as engineering and construction. He lives in Atlanta, Georgia where he enjoys spending time with his wife and researching real estate trends in his free time. Sam’s work as a freelance writer can be found on Building Product Advisor, a construction industry resource site.