Are multifamily properties a good investment? 3 Reasons We Think So!
So you’ve been eyeing up that beautiful piece of corner property, in a great neighbourhood, and you are dreaming of kicking off your real estate empire. Likely, the very first question you will be asking yourself is “Are multifamily properties a good investment? Or should I build a larger single family home?”
Whether you are buying to eventually sell or rent your new home, we believe a multi-family townhome, duplex, or even small scale condo is likely going to be your best investment, and we have a few reasons why! Read on to find out.
- It’s less risky. Financing can sometimes be easier to acquire, and your cash flow is more reliable!
Consider for a moment the scenario where you opt to build a single family home, and then rent that out. The family stays for a year, and then moves out. Your building is now 100% vacant. Now imagine instead you had built a four suite townhouse or fourplex. When the same family moves out, you are still at 75% occupancy. Generally, multi family allows for more flexibility and maneuverability with cash flow. To banks, this looks great. And we’re sure it will to you, too!
- Building more units increases your cost incrementally, not exponentially.
Instead of building / buying 20 different homes, you can build / buy 20 different units for a substantially lower price. Adding to a building increases the costs by a small amount, as opposed to building entirely new buildings for each rent-able / sell-able home. You benefit from economy of scale, while still having a large stock of inventory for rent.
- Third party building management becomes feasible.
If you are considering renting your newly built home, are you ready to take on the role of property manager? If not, having a larger stock of rentable units makes hiring a third party property manager much more reasonable as an investment. Unless you really enjoy dealing with home fix-it, this is likely a major benefit of scaling up your rental stock quickly!
These are just a few of the great reasons we think you should consider building a townhome, multiplex, or small scale condominium, if you have the right lot for it! We’d be happy to offer you more insight via phone or email, just reach out now!