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?”
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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.
1. 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!
2. 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.
3. 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!
