3 Reasons Why Multifamily Investing Outperforms Others

I’m sure you’ve heard by this point in your life that real estate is one of the best sources of passive income on the planet. A lot of the most successful people have built their empires through lucrative real estate investments. However, those who try to step foot into this market quickly learn just how volatile it can be. You don’t want to become one of those countless people who lose their entire life savings on real estate. This blog post will show you some important reasons why multifamily investing has changed the game.

Start Focusing on Multifamily Investing

Multifamily investing gives you a lot of control over your success. When it comes to real estate investing, you want as much control as possible. Think about all of that money lost on real estate during the last recession. 

So many properties dropped in value overnight but multifamily properties remained relatively unscathed. That one example shows you just how stable this market remains, even in the most inhospitable markets.

Now let’s look at three reasons why multifamily investing outperforms other types of investments.

Multifamily Investments Scale Quickly

Most people who start investing in real estate will look for smaller rentals. One of the best paths is to find several lower-price properties and then renting them out. This does generate a positive cash flow and is an easy entry point, but you will quickly run into a problem of scaling. Each property has to be maintained separately. This makes it extremely difficult to scale single-family homes. A multifamily complex scales much better than single family homes because they are all in one location. That means there is only one lawn to keep up with, fewer roofs to maintain, and only one set of utility bills. This all creates a lower expense per unit.

One of the primary goals with real estate is to scale up as quickly as possible. This can be done with single-family homes but multifamily homes present the path of least resistance. Everything is all in one location so it’s easier to build a sustainable business in just one investment.

It Takes Less Time to Build your Portfolio

Multifamily deals are great for anyone looking to build their portfolio quickly. One multifamily investment can land you multiple apartment units. For instance, gaining 20 new units in one deal is much quicker than trying to finance 20 separate single-family homes. Plus the upkeep of 20 separate properties would be much more resource-heavy than maintaining a single apartment complex.

Also consider how difficult it would be to finance multiple deals. It takes some people decades to build a portfolio of properties. Multifamily investing provides a unique opportunity to acquire multiple streams of income in just a single deal. Imagine being able to visit a single property, negotiate with one owner, and close on a single deal. All of that while gaining access to multiple sources of cash flow is amazing.

Multifamily Investments Provide the Unique Ability of Forced Appreciation

This advantage is highly advanced but it’s too powerful to not mention in this blog post. Single-family homes tend to follow a traditional approach. Comps in the area are what ultimately determine the value of a property. This is what makes real estate investing so turbulent. However, this is not how multifamily properties are valued. They use an income approach to determine the purchase price.

This distinction is important because it provides investors with the unique opportunity to force appreciation on it. Investors are no longer locked behind an unstable market. Forcing appreciation on a multifamily investment just requires a repositioning strategy.

In order to reposition a multifamily property, an investor will create a list that outlines all possible repairs and upgrades. Then this list needs to be thoroughly researched to attach a cost to each item. All that remains at that point is to establish a timeframe for those items. Choose upgrades that will boost revenues or reduce expenses.

Start Generating More Wealth Today!

Real estate investing requires you to start taking action today in order to guarantee success. There are a number of different strategies that work, but none are as powerful as owning a collection of rental properties. The fastest and most cost-efficient way of filling up your portfolio with rentals is multifamily investing.

Put what you have learned in this post to use. Would it be easier for you to put together one multifamily deal or look for multiple single-family properties? In truth, even if it takes slightly longer you are still going to be better off investing in a multifamily property. Even though the overall value is more, there is a lot less risk involved.

In short, multifamily investing is easier to scale so you can build a business around a single investment.