Multi-Family investments are a wonderful way to create an additional income stream. As with any investment, there are pros and cons you should be aware of. In this blog post, we will review the pros and cons of multi-family investments. The more you know about what to watch out for, the better decision you will make when it comes to multi-family investing.
Pros
Unlocking More Opportunities
Investing in a single-family home and renting it out means receiving one check monthly. However, opting for a smaller duplex or apartment building at a slightly higher cost can significantly reduce the risk of a 0% occupancy rate. This strategy ensures a steady income stream as you fill the units over time.
Increasing the number of “doors” also leads to a higher number of checks arriving each month. After all, who wouldn’t want to see more checks rolling in?
Save More with Affordable Properties
Investing in properties with multiple units can lead to lower costs compared to single-unit properties. Repairs and maintenance work, such as fixing a roof, can have a more significant impact when it benefits multiple tenants in an apartment building, as opposed to just one tenant in a single-family home. Managing several single-family properties may result in ongoing major repair expenses throughout the year!
Your Ultimate Real Estate Destination
Managing a single building allows you to conveniently collect rent and handle repairs in one location. However, owning multiple single-family homes could lead to frequent trips across town. Opting for a substantial investment property close to your residence can offer a more manageable approach to your multi-family investment strategy.
Cons
Increasing Tenants, Increasing Challenges
Prepare for increased activity when you invest in real estate. Expect more phone calls, more rent payments to collect, more conflicts to resolve between neighbors, and more maintenance tasks to handle. With the added responsibilities such as dealing with clogged sinks, broken windows, and cracked tiles, you’ll need to evaluate if the extra effort is worthwhile for you!
Turnover
Statistically, turnover is much higher in the real estate market. This means that investors in Kansas City may find themselves paying more in cleaning fees, new carpet, new locks, paint, and general fix-ups. Additionally, they will have to dedicate more time to interviewing and screening potential tenants, increasing the likelihood of having to navigate the eviction process.
Financing multi-family homes in Kansas City can be different from single-family properties. Traditional bank loans may not be readily available unless you intend to live in one of the units. Many investors opt for private loans or cash payments to fund these purchases.
Challenging to Sell Again
When it comes to real estate investing, reselling a single-family home in Kansas City will likely be more straightforward compared to selling an apartment building. The market for single-family homes is typically larger, attracting more potential buyers. However, selling an apartment building in Kansas City can be more challenging due to a smaller pool of interested investors. To attract buyers at the desired price point, it is essential to provide documented proof of the income generated by the property. Maintaining accurate records that highlight the value of your property is crucial for a successful sale!
Are you interested in investing in a multi-family property? We can help you with all the in’s and out’s so you can make the purchase that is right for you! Let us know what you are looking for!