Investing in multifamily real estate is a great alternative to stock market investments and offers ample opportunity to increase cash flow. Rental properties of all sizes can certainly create an impressive investment portfolio but there are a few advantages that multifamily properties make available.

Financing Advantages

Granted multifamily properties incur significantly more costs to purchase versus a single-family home, but oftentimes, it is quite a bit easier to get financing for multifamily buildings. The reason for this is multifamily properties produce a positive cash flow on a monthly basis, even if there are some vacant units. However, with a single-family property, there is absolutely no income being generated without tenants. For example an apartment complex with nine out of ten units being occupied equates to 10% non-occupancy, but a single-family home that is vacant is 100% unoccupied, making it much more susceptible to foreclosure versus the multifamily building. This difference weighs heavily in the risk factor of lenders.

Hiring A Property Management Firm Is More Valid

Property management firms typically take a percentage of the monthly income in return for handling the routine operational needs of rentals. For some rental property owners this percentage is well worth the expense to avoid hands on involvement. However, if you’ve battled with the thought of this additional expense with a single-family unit, it can quickly become more validated when you invest in a multifamily unit because the additional cash flow will offset the cost of these services.

Quickly Grow Your Investment Portfolio

Depending on how quickly you want to increase your rental property investment portfolio, acquiring a 20-unit apartment building is much easier than buying that many individual properties. Buying individual homes is more time consuming and often comes with several obstacles as well. Consider the time it requires to locate properties, follow through on the inspection processes, obtain 20 different loans, and all other components involved in a property purchase versus investing in a large building with multiple occupants. Your income stream will be higher and more immediate as you grow your collection in less time.

Bottom line, multifamily investing helps you gain access to more financial opportunities and can help increase your cash flow much faster than other forms of investment including stocks or other property types. Whether you’re looking for ways to scale your portfolio or diversify your income sources, multifamily investing is a great choice.