1. Multi-family work better with the changing U.S housing market.
High rents and the need for yields have created even more competition for single family homes. This has depleted inventory and hurt affordability. Demand from retail buyers, funds, and new real estate investors has increased competition, often inciting bidding wars. For some, this is creating better opportunities in the multifamily space than among residential homes.
2. Multi-family offers management efficiency.
There are many efficiencies of scale afforded to multifamily property investors. Management consolidated in one location, for more units, means lower management costs and fewer time demands. This can pay off in many ways, from maintaining occupancy to working more efficiently with contractors and improving maintenance. Every penny and labor hour saved in management means more directly added to the bottom line.
As single family investors experience these pain points and learn about the advantages of multifamily, they typically choose to step up to this asset class to scale their portfolios more efficiently.
3. Multi-family allows investors to save time.
It takes a lot less work and time to acquire a 46-unit apartment building than 46 single family homes?and I?m speaking from experience. Jumping into a multifamily deal may sound like a lot at first, but it is actually far faster and less time-intensive to acquire these properties. They require one set of paperwork, one set of loan docs, and one set of contractors. That leaves a lot more free time to be enjoyed or spent pursuing more deals.
4. Multi-family supports a higher ROI.
Renovations and improvements are some of the most challenging parts of investing in real estate. Flipping houses can be fun and profitable. Still, it can be risky. In multifamily property investing, improvements to individual units or community space can actually lift the appeal and value of the asset, because you can generally demand higher rent. That elevates the ROI.
Multifamily investors can also more easily reposition and control the value of their own properties. These buildings can be positioned to appeal to affordable tenants, affluent tech workers, and others.
5. Multi-family gives more direct control.
The value is not as reliant on comps as it is on your ability to increase the value through increasing the NOI. For single family homes, the value of your property is directly tied to surrounding comparables. In contrast, multifamilies allow for the investor to have even more control over the property value.