Who can afford to buy a house? Answer: Very few people. So “would be” first time buyers are either looking to their parents to help them with their downpayment or they are renting. Millennials have been renting at a steady pace due to the fact that they simply cannot afford to buy a home due to mounting college debt.
The upside for investors is there is a growing trend for Multi-Family properties, and due to the undersupply of these homes, supply and demand is predicted to skyrocket over the next 20 or so years.
So what are the upsides in investing in Multi-Family homes over multiple single family homes other than this new supply and demand?
1. There is no waiting for market forces to drive up the value. Multi-Family properties work on forced appreciation. If you engage in a proper repositioning strategy to your investment, you will be able to generate wealth in a relatively short period of time.
2. The fact that multiple tenants pay much of the expense limits your risk. If you rent a single-family home and it goes vacant for months, you will be paying the mortgage. But say two tenants decide to vacate your four-plex, you do not need to worry much as you still have two rents coming in to cover the expenses.
3. Economy of scale will make it much easier to manage the investment. When all of your units are in one location, the per-unit expenses will be much less. There will only be one landscaper, one garbage service, one building to maintain and collecting rent / evictions will be much less of a hassle than if you have multiple single family units all over town.
4. Less work on purchase. Think of the convenience of visiting one property, negotiating with one owner, and come to one closing with that owner. You will save a ton of time and be able to focus on your new investment much quicker
5. Who has figured this out yet? Most people are still putting their yearly savings into the stocks and shares. If you are smart you will be buying a rental property every year or two.. If you get in now, there will be much less competition with other investors – due to the fact that many property investors feel that its too difficult to buy a multi-family unit. Don’t be swayed by this, it’s much easier than you think and will be a much smarter buy in the long run.
So if you’re thinking about getting into the Multi-Family property game, I can certainly help get your started in your search. Contact me today: juliette(dotted)hohnen(at)elliman(dotted)com and I will find you a money maker that will be easy to maintain and will make more money than stocks and shares over time.