Why Multi-Family Investments Have The Advantage Over Single Family Homes

Real estate has created more millionaires than any other form of business. Multifamily and commercial real estate in particular have an advantage due to the economies of scale over single family investments. Whether the economy is booming or busting, people will always need a place to work and live.

Many people assume there is some big secret to creating massive wealth through real estate. But whether you're buying single family homes or major multifamily properties, when and how you buy a property are the most critical factors. Whether you get the lowest price or the best terms determines how good the deal actually is. And it's not as hard as many might think.

One of the easiest ways to find a property and buy it at a low price is to find a property that has been neglected and with the proper rehabilitation and repair, can offer you a major discount with maximum upside value. Properties are neglected for a variety of reasons, and these reasons can be the leverage point for which you negotiate the best price and/or terms.

Once rehabilitation is completed, you have the choice to sell for immediate profit or hold, cash flow and exit at an appreciated price. In economic times like these, when there is a lack of buyers in the market, holding the property is the most viable option and often the most lucrative.

The primary advantages of multi-family homes are the fact that the tenants are going to be paying their rent, which in turn pays your mortgage and all expenses until either the property is paid off or you sell. If one tenant vacates or is evicted in an apartment, you don't lose 100% of your income, just a fraction. Conversely, in single family homes, if you lose your only tenant, you have a giant hole in your income statement that sometimes takes a long time to fill.

The additional income safety combined with the sheer size of the monthly income from multi-family homes provides a very lucrative and attractive alternative to simply investing in single families. The amount of time and work that goes into each is not that different, however the rewards greatly favor multi-family investments. All things constant, the return on investment for apartments greatly outweighs that of their smaller counterparts.