The Pros and Cons of Multi-Family Rentals

Multifamily rentals are a type of housing, defined as units within a single structure meant to accommodate more than one household. Apartment buildings and duplexes are just two examples of multifamily rentals. If you are interested in purchasing property suited for this type of real estate, it’s important to weigh all of the pros and cons surrounding this decision.

Pros

There is more money to be made from multiple tenants. If you decide, once you’ve examined all the caveats and expenses, that it will be more profitable and satisfying in the end for you to pursue this type of real estate venture, then the rental income will be considerably more substantial than a single property. Another advantage of a multifamily rental is the simplicity when it comes to mortgage loans. It is much less paperwork and hassle to structure a bank loan when you have fewer properties to discuss. Likewise, with insurance, there is only one policy to worry about.

The pricing methodology is also completely different than single-family homes. They are often subjective and can change according to neighborhood value. Comparable home sales in the vicinity hold a lot of weight. By contrast, apartment buildings are seen as a long-term investment based on their income-generating potential.

Another advantage of having multiple units is the less likelihood of vacancy. Having more units to fill means a more consistent chance of getting monthly income from tenants. In addition, most people seeking entry into the real estate investment world are looking at single-family units. This means that you will face less competition when searching for the desired property.

Cons

There are, of course, negatives when it comes to multi-family investment deals. Initial investments into this type of real estate will require significantly more cash up-front to gain a foothold. In addition to money, your time will also be taken up. As a landlord, you will have many responsibilities regarding property management, maintenance issues, and rent collection. The more units you own, the more of a demand there will be on your time. If you are not prepared to commit to a full-time lifestyle change, it might be wise to either reconsider your decision or to hire a property management company. Third-party property management firms will cost you money, but also relieve you of a lot of day-to-day stress.

This article was originally published on https://jasoncohenpittsburgh.org/

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