5 Common Misconceptions about Multifamily Investing

5 Common Misconceptions about Multifamily Investing

Multifamily real estate investing has turned out to be great for those investors. So when planning on taking a big step in the industry, one must be aware of the essentials. No doubt there are benefits that one can get from the same. But despite all of this, there are so many questions that are raised about real estate investment. A major one is if one should choose to invest in multifamily or single-family homes. When you plan to go for real estate multifamily investment you must know there are certain misconceptions or myths surrounding the industry. Having an idea about it will prevent you from getting misled during the process and assure you move ahead in the best way to achieve your goal.

Myths about multifamily

If you are new to the industry, then you probably might have heard a lot of misconceptions about multifamily properties. But to be honest, those misconceptions are just talks. In reality, the multifamily is one of the best investments you can make to earn good returns from it. Here are the top 5 misconceptions you must be aware of.

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1.     It is too expensive

A most common misconception the real estate investors from getting here is that multifamily homes are way too expensive. Technically it can be true because you can easily find a single-family home for as low as $100,000 in various locations all across the country. But when it comes to the cost of the apartment building, it can go over a million dollars. But you must consider all the aspects to know better. If you choose to buy a 20-flat building for $1 million, then the average cost per housing unit will come to around $50000 or even half. This would mean that multifamily real estate investing is actually a lot cheaper than single-family homes.

2.     Harder to finance

Another major myth about the multifamily property that keeps the investors from making the investment is that it is harder to finance than purchasing a single-family rental property. No doubt, it is absolutely true that you might have to pay $100,000 for a real estate property in the case of a single-family home, but for multi-family, the cost can go as high as $1 million. But again, you have to be realistic.

Not all people are capable enough to take a million dollars out of their own pocket for purchasing or making the investment fully in cash. In both cases, you will have to opt for a loan from the bank. Believe it is not, but in reality, getting a mortgage on a multi-family property can be a lot easier. This is a result of secured and safer investment in the property type. So it is now time that instead of worrying about how to invest in multifamily real estate, you take the big move of earning a good return.

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3.     It costs high for maintenance

No doubt there will be a lot of expenses in the case of multifamily homes than single-family homes. After all, you will be maintaining 20-50 housing units. They will all have their own specific requirements. But while you own a multi-family property, you need to understand that the cost you pay will be less than per housing unit in the case of a single-family home. However, it is true that multifamily properties will require professional property management. After all, you won’t be able to manage it all. Professional management will not be bad as you can put your focus on the other vitals of your job or family. In addition, they will provide you with various discounted products and services you might not be aware of.

4.     Less profitable

The investors who go ahead to invest in multifamily real estate property will see that it turns out to be extra beneficial and profitable. But it depends on the perspective of the investor. A multi-family property will assure you a better cash flow as the rentals of the housing unit will come from about 20-30 units or more instead. This will never happen in the case of a single-family property. If you look at the rental income or the cash flow, then you will identify that the apartment building is the best. However, you have to remember you have paid much less for a unit in multifamily properties. Thus, it can be concluded that overall multi-family real estate investing will turn out to be affordable with a promise of better returns.

5.     Hard to keep occupied

Investing in multifamily homes will be responsible for multiple tenants rather than one. However, the investor and the landlord will have to give all their effort and time. But it is not possible to keep the property fully occupied all the time. If you consider the entire income, then you won’t suffer much.

When you have got a single property home, and it is unoccupied, then there won’t be any cash flow. However, in the case of multi-family properties, even if 2- 3 tenants choose to leave the property, you will have other tenants residing over there, which will assure constant cash flow. Thus the vacancy rate is never an issue with multi-family real estate investing.

Get professional support

No wonder people look for how to make money in real estate. However, when you have got proper industry understanding, things will be easy. But if a new investor, you can consider getting support from The Multifamily Mindset. We have got expert professionals to guide you. No matter whether you are planning multi-family real estate investing or any other investment options, we will be there to support you. From helping you understand the right market for investment to guiding you with the essentials required during the process, our expert will stay by your side.

Contact us to know more.

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