5 Best Reasons to Bet on Multifamily Investments

This bet may not seem like a benefit, but it is and I think most investors do not take into account the expense and time it takes for a person to amass multiple properties - as opposed to a 25-unit multifamily, or mobile home park. Even if you were to amass that many homes, imagine that you would end up dealing with the difficulty of multiple closings. Not to mention the fact that you would have visited all of the homes before putting in an offer.

If you own a single-family home and it goes vacant for two months, guess who will be paying the mortgage – you. But if you own a 6-plex and two tenants decide to vacate, you still have four rents coming in to cover the expenses.  “Multifamily properties allow the investor to limit their risk, by having multiple renters to pay the expenses. It lends itself to a strong revenue stream model that will sufficiently pay the expenses and generate cash flow at the end of the month.”

Single-family homes are limited in how they build value - that is the “comps” in the market that drive the value of a property. What is a 2-bedroom loft selling for in downtown Vancouver? The home is compared to similar properties in the market and then valued on that basis. “Multifamily properties are unique because you have much more control over the value of the property and you can increase the appreciation by driving up the net operating income. There is no need to wait for the market to drive the value because you can drive a sound repositioning strategy for your investment, make some changes to the amenities, and give a better user experience. This will generate wealth in a very short time frame and a great reason to consider multifamily properties.”

In the real estate investment space, most themes surround the idea of fixing, flipping and wholesaling – strategies that focus on acquiring single-family homes, commercial investment properties and businesses. There is a lot of competition in these spaces which ultimately drives margins down, and profits suffer as a result. “The thing is the competition is not as fierce as when you are shopping for a single-family home and compete against thousands of buyers and buy a property for a significant increase because it has a cute porch. Buying a multifamily becomes more about the math and how to generate value utilizing the right strategy.”

Multifamily investing means smaller homes – apartments, duplexes or town homes. The more the homes, the more the walls, roofs, floors and stairs that require maintenance. However, for investors who have multiple homes to refurbish and renovate, there is a better chance of getting steeper discounts and being able to employ more professional firms that work on large scale projects instead of single homes.

“Our hope is to have provided enough information to give you a good picture of what the benefits of multifamily properties area and how to make the right decision for your investment. This is something we stand behind at Klein – providing our clients with the right advice and ensuring that we have their best interest at heart. It’s about building trust and ensuring that we deliver the best value through the right advice and this is paramount to helping people look at purchasing a multifamily investment.”