A real estate investor should have a varied portfolio to create wealth at a faster rate. Flipping the properties is not the only way to operate in the real estate business. An investor can expand his range of activities to include myriad aspects of real estate like wholesale, retail, pre-foreclosure, rehab, sale purchase, and lease options. It is all about finding great deals in the market at the right moment. The real estate business is essentially a small home-based business. A beginner can consider the option of investing in multi-unit apartments, along with single-family homes. Multi-unit investing is much more economical, is less risky, and has a number of advantages over other forms of real estate investment.

Advantages Of Multi-Unit Investing 

1. Cash flow. The possibility of generating steady cash flows is always greater in multi-unit investing than from single-family houses. A multi-unit apartment is occupied by a number of tenants who pay their dues regularly, month after month. If you have a four-tenant block and one unit remains unoccupied, at least the other three units will be paying the rent regularly, resulting in a steady cash flow to meet all your expenses. In the case of a single-family unit, however, if the tenant vacates and the house remains unoccupied, it puts an instant brake on your cash flows. This may be quite disrupting and can even wipe out your entire profit for the year. Thus, multi-unit investing minimizes such risks. A single-family unit is riskier than having more units under one roof.

2. Maintenance. In multi-unit investing, there are many units under one roof¡ªunlike a single-family unit, which has one unit under one roof. This makes it easier to maintain a multi-unit dwelling. A manager can be hired to overlook any complaints of the tenants. It works out to be more economical, too. A comparison between a four-apartment multi-unit building and four individual single-family houses will highlight the comparative economy in maintenance. In case of roof damage in single-family units, you will have to repair four different roofs, while in a multi-unit investment you have only one roof to repair. So, too, with yards and lawns; in single-family units, you will have to maintain four different lawns/yards of four tenants spread through out the town. In a multi-unit, all the tenants are located under a single roof, so you need to maintain just one lawn. All these maintenance economies work out cheaper in a multi-unit investing than in single-family units. Moreover, a bigger group of tenants reside who get together and pool their money to pay for minor types of maintenance work in a building. A single unit always looks out for the owner to repair even minor flaws. Thus, multi-unit investing is definitely more economical in terms of maintenance.

3. Selling the property. A multi-unit complex appreciates more than a single-family house, another benefit of multi-unit investing. If the market appreciates 10 percent, then a single-family unit will rise just that much, say $20,000 will fetch $22,000. A multi-unit complex comprising four apartments will rise four-fold and give better returns. Each $20,000 unit will give 10%, netting 40% of profit in the same market. A multi-unit investment in a good location, near a work place and business center with transport availability appreciates much more and always remains in demand for tenancy. So even if an investor wants to sell his multi-unit property, it will fetch a better price than a single-family unit, thus proving more advantageous.

4. Flipping. It is easier to flip single-family units if an investor knows the market well. There is a huge competition in single-unit investing, since it seems to be a done thing in real estate. Simply concentrating on single units may not earn a reasonable return always. It is always better and safer to have a mixed portfolio of multi-units and single units. With the right knowledge and experience, multi-units can be flipped easily. You can even hire a good management company to help in wholesale, retail, or lease purchase of individual units of multi-units. This gives you the option of utilizing your time for more profitable activities.

There are many advantages to investing in multi-unit buildings over single-family units. Regular cash flows are ensured even if one of the units remains vacant, maintenance is more economical, and flipping is also comparatively easier. A real estate investor would do well to seriously multi-unit investing.

 

Do you own real estate articles or stories and want to share with other investors? 
You have chance to win $100 Amazon Gift Certificates. We will give away 3 prizes for top authors each month!

Email your articles or stories to:  articles@buyincomeproperties.com

 

© Copyright 2001 - 2010 by BuyIncomeProperties.com               

 

 

Visit Real Estate Forums for every real estate investing topics!  Enter Here

    

Top of Page