The 5 Money Making Advantages Of Multi-Unit Investing
by: David Lindahl
Having rehabbed over 700 properties in the
last seven years and collected over 3200 apartment units I’m
often asked, how can I become wealthier faster investing in real
estate?
While most investors concentrate on some aspect of single family
houses, I was always interested in multi-units (apartments)
first, and then single family homes as a means of getting more
multi-units .
From the very beginning of my investing in real estate, I liked
the idea that a group of people (the tenants in a building)
would get together and pool their money to pay down the mortgage
on a property, and I liked the idea that they would also pool
their money together to pay for all of the maintenance work for
a building.
I especially liked the idea that they would give an owner so
much money that
the owner would have a bunch of money left over at the end of
every month that could be used to either re-invest, save or to
go out and have a good time with.
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Essentially, I like the idea that other people were willing to
help make me wealthy. I liked it even more when I started using
management companies to manage my properties and no longer had
to have contact with my tenants.
I soon came to realize that I could also wholesale, retail,
pre-foreclosure, rehab, subject to and lease option
apartment houses as well.
I also realized that there were certain advantages that
investing in multi-units buildings had over single families.
1) The first was cash flow. Cash flow on a
multi-family is always greater than that of a single family.
Simply because you have more rents coming in.
The more units you have under one roof, the less risk you have.
If you have a single family house and you lose your tenant,
you’ve lost 100% of your income. In some instances, this could
be your entire profit for the year. If you had a three family
and lost a tenant, you still have two rent coming in to pay your
expenses.
2) Economies of scale are in mulit-unit buildings. If you have
six single family houses opposed to one six family, you have six
roofs to be replaced or repaired, six lawns to be maintain, six
tenants spread out through out your city or town.
In your six family you have one roof, one lawn and your tenants
are centrally located. Economies of scale are in your favor.
3) There’s a lot less competition than there are in single
family houses. Why? Because no one is out there teaching how to
do it and all the single family guru’s make flipping single
family houses sound as easy as chewing gum in the dark. The
smart investors put multi-units in their portfolios along with
single family houses.
4) Because of the bigger cash flows, you can afford to hire
management companies to manage your tenants, thus eliminating
that hassle while you go out and do what you do best (or should
do best), find and finance them.
5) Your pay days are a lot bigger when you finally sell your
property. This is because an apartment complex cost more than
single family homes, because of this they obtain a greater
dollar amount of appreciation. For example, a $100,000 single
family house will in a market that appreciates 10% will be worth
$110,000 while a three family house worth $300,000 in the same
market (10% appreciation) will increase to $330,000. That’s
$20,000 more money in your pocket!
You’ve know a few people who have made a lot of money flipping
single family houses, but if you think of the all the people you
know who have become extremely wealthy through real estate,
you’ll realize that they did it through owning multi-units
(apartments).
These are the five biggest advantages to investing in
multi-units, there are many, many more. If you are interested in
creating more wealth at a faster rate, adding multi-unit to your
portfolio is the way to do it!
Note: David Lindahl, also known
as the “Apartment King has been successfully investing in single
family homes and apartments for the last eight years.
Contact Dave