Deciding on a multifamily real estate investment is not as simple as window shopping on the weekend. First, investors need to conduct their due diligence. Fortunately for investors, experienced multifamily real estate investment managers are the perfect partner for people looking to invest in these properties. We’ve put a tremendous amount of effort into working with potential and veteran investors to find and finance the best investment properties through multifamily real estate investment management.
A logical first step for many investors is to buy multifamily property. Multifamily real estate investing is a popular form of real estate because it's an asset class that most people can understand, having previously rented an apartment or owned a home. People can understand the basics: each unit needs to have a functioning kitchen, bathroom, and some combination of bedrooms and living space. Rentals typically run on month-to-month or annual leases using simple, straightforward paperwork. In short, for the masses, buying multifamily property is a lot less complicated than investing in office space, retail, hotels, and other asset classes. It's a great way to get started with commercial real estate investing. But to be sure, even multifamily property investing is not for the faint of heart. There will undoubtedly be challenges that investors face. Here at Reside Capital, we try to make any challenges that present themselves as painless as possible.
At first sight, it might seem as though securing a loan for a single-family property would be far easier than trying to raise money for a million-dollar complex. Still, the truth is that a multifamily investment property is more likely to be approved for a bank loan than the average home. That's because multifamily real estate consistently generates a strong cash flow every month. This remains the case even if a property has a handful of vacancies or a couple of tenants late with their rent payments. If a tenant, for example, moves out of a single-family home, that property would become 100% vacant.
On the other hand, a ten-unit property with one vacancy would only be 10% unoccupied. As a result, the likelihood of a foreclosure on an apartment building is lower than a single-family rental. This equates to a less risky investment for a lending institution and can also result in a more competitive interest rate for the property owner.
Multifamily real estate investors work with an individual deal syndicator to raise capital to purchase a specific rental property. This scenario provides less liquidity, but it also provides investors with direct knowledge of the property they are investing in to complete their due diligence in research. Regardless of the vehicle chosen, passive investors in multifamily housing have the potential to realize both the benefits described above and a handsome return.
Contact us today for more information on multifamily real estate investment management. We are here to guide you through the process of building wealth for future generations.