Investing in real estate is an exciting process, especially with residential and non-residential properties being some of the most sought-after investments. However, like all ventures, there comes both advantages and disadvantages. When looking to invest in multifamily properties, it is important to educate oneself on both the pros and the cons of the investment process.
Should You Invest in Multifamily Properties?
When investing in a multi-family property, one of the advantages is the likelihood of securing a bank loan. For multi-family properties, there is less loan-to-value risk involved. Once you reach a loan value of 1 million dollars or more, you can apply for a recourse agency loan. These loans typically come with favorable terms and conditions. By investing in a multi-family rental property, this can provide regular income and increase return on investment, since multi-family real estate consistently generates cash flow each month.
Another advantage is the ranging number of rental units that comes with a multi-family property. Instead of purchasing ten rental properties, such as a single-family home, multi-family properties give a portfolio boosting advantage to your business by having multiple properties in one location. It is easy to see the vast potential to grow a property portfolio with a multi-family investment property. So, if you’re looking to scale your property portfolio efficiently, multi-family is the way to go.
Potential Multifamily Disadvantages
With any real estate asset, there is a potential for turnover. Unfortunately, with multi-family units, there is a high turnover rate. On the bright side, the demand for apartments is higher than the turnover rate. It can be easy to find another tenant, especially with the help of a good property management company. Property management can help take care of all issues, such as maintenance and rent collection, and help prevent tenant turnover. Potential for tenant disagreement is also high within multi-family real estate investment. This comes back to the importance of having a great property management team. Not only does the property manager handle landlord-tenant issues, but they can take tenant disagreements off your hands.
Handling Disadvantages with a Great Property Management Team
Beck Partners has four experienced property managers, two full-time CPAs, and covers both commercial and multifamily properties. The Beck value is sourced from its people. We aren’t looking to put band-aids on things. Issues in property management are inevitable; it’s how a property manager responds that will make or break them.
Beck Partners not only provides you with a full scope of services covering Commercial Real Estate, Insurance and Property Management, but we give you the Power of the Plus: a wealth of business expertise. From the little questions to the most important decisions facing your business, Beck can lend you the advice you need to travel along a path of exponential growth.
Our difference is immeasurable. We go far beyond sending you a helpful email. You will have everything you need to meet your business goals within one, valuable partnership with Beck. From your leasing to your personal insurance, you will be covered every step of the way, including on-hand advice from experts who have been in your shoes.
For more information, you can reach out to Chris Cobb, a Beck Partners Associate, at (850) 477-7044 or via email [email protected].
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