Is investing in multifamily properties for you?
- One of the best things about investing in multifamily properties is that you have a lot of control over your own investments.
- Don’t be intimated by the higher price of a multifamily unit or apartment complex; financing may actually be easier than you think.
- Despite high rental rates in large cities, many renters still feel it’s cheaper than a mortgage payment.
If you’re considering investing in multifamily properties or purchasing an apartment complex, now is a great time to get started. With a large number of people renting and a shortage of good inventory, it’s a landlord’s market out there.
When done correctly, investing in real estate can be a great way to earn extra income or build an investment portfolio.
From where to get financing to finding tenants, this guide will give an overview of everything you need to know about becoming a landlord.
Your investment is in your hands
One of the best things about investing in multifamily properties is that you have a lot of control over your own investments. When you invest in the stock market, for example, your money is going up and down with the market. If you invest in a retirement fund, you’re often passively sitting by while a third party holds onto your money.
While these are both great long-term plays to save for retirement and build wealth, real estate can give you something you can actively control. Investing in real estate as a landlord will give you an opportunity to seek out a market, maybe fix up a property, and find great tenants.
When you’re in a good real estate market, apartments are hard to come by. Finding a multifamily home or an apartment complex in a great neighborhood is almost always a safe bet.
One of the great things about being an investment owner is that you can also have more control over who you’d like to rent to, when you’d like to buy, or when you’d like to sell.
Financing is easier than you think
If you’re intimated by the higher price of a multifamily unit or apartment complex, financing may actually be easier than you think. Because you’re generating rental income, lenders can use this projection to offset your mortgage payments.
Let’s say your mortgage payment is $3,000 a month, and you have four apartment units that rent for $1,000 each. Not only are you paying your mortgage every month, but you’re also earning $1,000 a month in profits.
A lender looks more favorably on a multifamily home loan because when there are more tenants, there is less risk. If you’re renting a single-family home, for example, and that tenant doesn’t pay their rent, it’s all on your shoulders to pay. If you have three tenants to split the payment between, you’re only responsible for the one who didn’t pay.
There’s a huge rental market in major cities
In major markets across the United States, we’re seeing a significant shortage of apartments and multifamily units. Millennials make up most of the rental market, and many aren’t ready to take the plunge into homeownership. Despite high rental rates in large cities, many renters still feel it’s cheaper than a mortgage payment.
If you can find a good investment opportunity in a nice area close to transportation and amenities, you’ll see higher rental rates and quality tenants. When there’s a shortage of inventory, you can also be more discerning when it comes to who your tenants are.
Another perk to renting out units in a large city is that you’ll have access to a lot of contractors, maintenance professionals, and management companies. Anything you don’t feel comfortable doing yourself, you can hire someone to help you with.
A deeper dive — Related reading from the 101:
- 8 ways to organize your home that would even impress Marie Kondo | Living 101
There are many ways, including small DIY projects under $25, to add more storage to your already existing living spaces.
- Awesome ideas for transforming your house into the coolest home ever | Living 101
Here you’ll find a list of exciting ideas that are guaranteed to deliver the coolest home on the block.