Multifamily property investment pros and cons can help you understand what’s involved in procuring and holding such an asset. As with any investment, there are upsides and downsides. But, you’ll see the pros far outweigh the cons. And, that’s why so many people get involved directly with commercial property investment. Or, through REITs or real estate investment trusts.
Multifamily Property Investment Cons
Many people consider going into some form of real estate investing to generate a passive income stream. But, you should know, if you are new to this, there is really no such thing as truly passive income. That’s one of the downsides of investing in rental real estate. However, if you become educated about the dynamics, you’ll find the small amount of work is well worth the big reward.
A multifamily could be as small as two units in a duplex or as big as thousands of units in a large apartment complex. Few people ever buy a multifamily to live in. But instead, most multifamily properties are owned by real estate investors who rent the properties out to those who can’t — or won’t — buy a single-family home of their own. —Bigger Pockets
Another downside to investing in multifamily real estate is the initial buy in price. Of course, being so much larger means it comes at a higher price. But, that doesn’t mean it is unattainable. In fact, there are quite a few good ways to obtain commercial real property. So, it’s not for everybody but that doesn’t mean it isn’t a solid investment.
Multifamily Property Investment Pros
Even though there are a few things which might turn some people away from commercial real estate, there are other factors which make it a great wealth building vehicle. Here are some of the biggest benefits of multifamily property investment opportunities:
- Multiple rent payments. If you buy a single family home or even a duplex, there are just one to two monthly rents to collect. But, with a multifamily property, there are a number of monthly rents to collect. It’s a money multiplier that’s quite lucrative.
- Different financing options. When you purchase a rental home, particularly something like a single family property, you’ll discover many financing obstacles. That’s because it’s usually too risky for traditional bank lenders. But, with commercial real estate, you can take advantage of hard money loans. These offer flexible terms, short-term financing, and more benefits.
- Less acquisition competition. Unlike single family properties, which often have many different interested buyers at one time, multifamily properties do not attract a lot of buyer competition. Which means it’s easier to purchase.
- Provides leverage for more property buys. Another huge benefit of owning commercial real estate is that it can act as substantial leverage to buy more properties. With it as an asset, you have more standing to add to your portfolio.
If you’d like to learn more about commercial real estate investment benefits and more about the process, please contact me.