The Benefits of Investing in a Multi-Family Property

New property investors often begin with buying a single family home. After all, they grew up in one and live in one--so it is only natural to choose a single family property at the beginning of an investment property venture. However, after the home has set vacant a few months for one or more times, new investors discover multi-family properties offer a more steady income.

Advantages of Multi-Family Properties

By far, the largest advantage is if one unit of a multi-family property is vacant, it doesn't cut the income stream to zero. While it may reduce it to 50 percent in a duplex, it is more preferable than no rent collection at all. In addition, maintenance fees and property management costs are reduced because their is only one unit, not several detached single family houses.

Other Benefits of Investing in Multi-Family Properties

While vacancy rates and multiple rent  payments are good reasons for owning multi-family properties, there are more benefits. Which, particularly over time, greatly enhance their investment value:

Repair Expenses

Having to replace ten roofs on ten single family homes is very expensive, even if done during separate times. But a ten unit multi-family property needing a new roof is one job and done. Ten single family homes means ten different permits, adding to the cost substantially.

Property Management Fees

Using the same example of ten single family homes versus a ten unit multi-family property, it's less expensive to incur property management fees. Single family homes tend to rent for more than apartment units. And with property management agencies basing their rates on the amount of rent collected, it means less of an expense.

Selling and Holding

Here again, selling ten single family homes will be more difficult that selling one multi-family property. Not only must each single family be negotiated separately, they all must pass inspection. Whereas with multi-family properties, there is only one structure. It also makes it easier with regard to real estate commissions. Investors won't have to deal with ten different personalities.

Cap Rates

The cap rate or net operating income/price is in play, making it a better investment generator. In other words, a multi-family property's value is based on how much income it generates and is not exclusively tied to the real estate market. So while a single family may decline in market value during downturns, multi-family properties continue to collect rents. And those rents are proof positive of the property's earning potential.


For more information about Homer Alaska Real Estate contact Coastal Realty Alaska