Investing in real estate can be an important part of a diversified investment portfolio. Multifamily investing can be the tool to achieve smart, passive income while building generational wealth. There are many reasons why you should consider multifamily investing right now.
Multifamily real estate buildings are generally higher priced investments so at first glance they appear too expensive to the average buyer. However, with the purchase comes a higher potential for increased passive income. It is a higher loan, but it is also easier to finance. Lenders will allow borrowers to include potential rental income in the cash flow calculations to qualify for their loan.
A 10-unit building is more efficient to operate than 10 individual single-family rentals. Consolidating the expense into one investment reduces the financing and refinancing costs. Maintenance is also more efficient. There is one roof instead of ten, one lawn contract, etc.
Higher Net Operating Income
Total income minus total expenses equals net operating income. This calculation is key to comparing investments and returns. Demonstrating a high net operating income from an income property is a valuable factor when potentially selling the investment or qualifying for additional loans to expand a portfolio. Increase income by decreasing operating expenses.
Lower Vacancy Rates
Use the power of diversification to reduce risk. An empty single-family home is 100% vacant. An empty unit in a 10-unit building represents only 10% vacancy.