Considering the emerging trends in the real estate market in 2019, multifamily properties have captured the attention of a large number of investors. No doubt, the buzz around investing in multi-unit commercial properties is all for a good reason.
If you are interested in creating a diversified investment portfolio with a stream of cash flow in 2019, then investing in multi-family properties is what you should go for. However, if you’re wondering about the benefits of investing in multi-unit properties, we have got you covered.
Investing In Multi-Unit Real Estate
Over a couple of decades, many economists, investors, and business experts have promoted multi-unit property investment as one of the best ways to generate passive income. Although many things have changed now in the real estate market, still the benefits of investing in multi-family homes cannot be overlooked.
1. Improves Investment Portfolio
As an investor, you probably look for investments that fetch you higher profits in less time. In that case, multi-family real estate is the most suitable option. It not only brings you bigger returns, but also expands your investment portfolio.
Acquiring duplex, triplex, or similar property is much easier and efficient than investing in several single-unit real estates, located in different areas.
2. Reduced Risk of Vacancy
Generally, retail properties, industrial buildings, and residential dwellings have only one or two tenants that are bound in long-term rental agreements.
On the contrary, multifamily real estate properties, such as mobile home parks, RV parks and resorts, and apartments, can have dozens of tenants locked in diversely-structured rental agreements, which eventually minimize the risk of vacancy during hard economic times.
However, there is no denying that the risk of vacancy is always present. Yet, if you manage vigilantly, it will limit the vacancies to less than 10%.
3. Financing is Easier
Although investing in multi-unit properties requires more capital, availing mortgage loans can make financing less complicated. Not to mention, lenders are more likely to approve loans for such properties, as it minimizes the dependency of cash flow on a single tenant.
In other words, having more tenants with multi-family homes ensure loan officers about timely loan payments.
However, if you’re looking forward to investing your money in multi-unit commercial properties or multi-family homes, you need to keep certain factors in mind.
• Rising Interest Rates
Due to federal monetary policy and recent trends in the real estate market, you can expect an increase in interest rates this year. Therefore, it’s crucial for you to keep an eye on debt pricing.
• The Millennial Effect
In bigger America cities, like Houston, San Antonio, DFW, and Austin, the Millennials are the target demographic for multi-family homes.
Of course, financial complications, increasing inflation, and consequential debts have made it difficult for them to own a home. For this reason, many cities in the U.S. have experienced significant rental growth over a couple of years.
• Multi-Family Housing Inventory
The increasing supply of multi-unit properties is expected to slowdown rental growth in 2019. Yet, investing in multi-unit real estate is still encouraged.
The Main Takeaway
To put in a nutshell, multi-family properties are surging in popularity, and are likely to be a great investment for 2019. The tax and security advantages that come with investing in multi-family real estate are some of the major reasons people consider it a safe investment.