Multifamily Home Investing – Texas Multifamily Investing Information
When looking at all of the various investment vehicles in today’s financial world, many investors prefer investing in Multifamily Properties, especially those who are looking for an additional source of passive income every month. Investors who look for slow and steady capital appreciation in the equity value of their portfolio, as well as recurring monthly cash flow, mostly opt for this investment strategy. When compared with investments in other residential properties such as single family houses, duplexes, four-plex, etc., multi-family properties are generally easier to finance, compound returns and profits more quickly given the sheer economies of scale.
MarketSpace Capital, located in Houston, Texas, develops best-in-class multifamily projects in some of the most attractive real estate markets in the United States. MarketSpace and its senior leadership team are available to provide answers to the questions arising from many first time real estate investors such as “How do I make money on real estate?” MarketSpace Capital is there to help the investors in understanding the concepts of Cash on Cash Return, Internal Rate of Return, Equity Appreciation, Principal Pay Down, etc. MarketSpace cal also assist an investor in understanding the unique tax and estate planning benefits that multifamily investing can provide. Simply put, MarketSpace Capital is there to provide friendly guidance and help throughout the process of investing in a multi-family property.
HOW ARE THESE DIFFERENT FROM SINGLE FAMILY PROPERTIES?
When it comes to residential real estate, there are two main types of properties that one can invest in single-family (including duplex, four-plex, etc.) and multifamily. Both single family and multi-family are popular ways to invest in real estate by owning a collection of rental properties. Although, the properties that only have one residential rental unit are commonly referred to as single-family properties, while apartments or the complexes that have multiple rental units are known as multi-family properties.
Generally speaking, there are fewer regulatory and zoning hurdles when building a portfolio of small homes, when compared with multi-family. However, the additional effort for multi-family can definitely pay off as there are numerous advantages to capitalizing and investing in larger, multi-family residential communities. Some of them are:
Easier to Finance
In most cases, the cost of acquiring an apartment complex will be higher than the cost of purchasing a single-family home as an investment. Consequently, it might appear that securing a loan for a single-family property would be easier and more relaxed on the underwriting, but the truth is the opposite. A multi-family property is more likely to be accepted by a bank for a loan than a single property, because it takes a bank underwriter the same amount of time to perform their due diligence on a larger, multi-family loan as it does for a single-family purchase. Additionally, the multi-family real estate asset is expected to generate a larger cash flow every month, in which to serve the debt. This makes it a less risky investment for lending institutions.
Less Time to grow a Portfolio
Multi-family properties have become a suitable choice for property investors who demand to accumulate a relatively large portfolio of rental units. Acquiring a large number of apartment units (say 20) is quicker and more time-efficient than buying 20 different single-family homes. As in the latter case, one will need to work with 20 different sellers and conduct inquiries on 20 houses that might be located at a different address. All of this overwhelming tasks can be avoided by acquiring one multi-family property purchase of 20-units.
The benefits of having a professional property manager
A property manager is normally paid a percentage of the monthly income that a property generates for performing the duties like, finding and screening tenants, collecting rent payments, paying bills, preparing financial and property reports, handling evictions and maintaining the property. Many investors who own small properties or single-family homes do not have the ability of contracting an external manager as it would not be a financially viable decision due to their small portfolio. The amount of money that multi-family properties yield each month give their owners a portfolio of cash flow to pay for the much needed professional property management services that are generally not available in a single-family investment.
In a nutshell, there are many benefits related to owning a multi-family real estate. These comprise access to easier and better financing occasions, the ability to rapidly grow one’s rental property portfolio, and the benefits of hiring a professional property manager.
IMPORTANT POINTERS ABOUT MULTIFAMILY HOME INVESTING
Although the MarketSpace Capital Due Diligence checklist is rather lengthy, the following checklist should be used by those who are looking to invest in a multifamily investment property:
- Location plays an important role in a real estate investment field. Location becomes the most desired criteria for tenants and renters. That’s why before investing in any multifamily properties, an investor should focus on high-growth, high-yield areas where properties are in high demand and have a well-maintained neighborhood.
- The total number of units on the property also becomes an important point of consideration for the investors due to the economies of scale.
- The forecsted income and property cash flow are important considerations before investing in a property to understand the return on the investment.
MarketSpace Capital is available to assist you every step of the way in our goal of maximizing the returns and minimizing the risk in your investment.