The multifamily property industry is growing. In 2017, multifamily construction totaled to $61 billion.
If you’re an investor who’s looking for a new investment opportunity outside of the traditional single-family home, you’ll receive a good ROI when choosing the multifamily market.
But how do you choose your financing?
There are many different investment options, a common one is taking out a multifamily loan. This is a loan obtained for commercial purposes and includes different multifamily properties such as apartment buildings and condominiums.
Still not convinced you should finance your multifamily investment with a loan?
Here are 10 benefits of taking out a multifamily loan.
1. Less Work, More Buyers
Picture this — you want to manage 20 properties. Is it more work investing in 20 homes or 20 units? When you invest in a condo complex or an apartment building with 20 units, you can fill up those spaces quickly and it takes less work.
This is also convenient from the buyer’s perspective. They move in quick because they’re likely only renting. There’s no worry about signing up for a mortgage, fees, and closing dates (unless they opt to buy a condo).
All you need to do is take a multifamily loan to finance this project.
2. More Affordable
After you start investing in multifamily properties, you’ll realize maintenance and other costs are more affordable than a traditional home investment.
That’s because everything is streamlined — the yard work, garbage, and services are all focused in one area as opposed to spreading out amongst several homes.
When you take out a multifamily loan and use that toward construction and maintenance, you’ll discover you save more money and receive a better return on your investment.
3. More Control in the Market
The multifamily and traditional housing markets are different. Home buyers are picky. In addition, the success of your sale depends on the overall real estate market.
Investors have more control over multifamily markets. That’s because there isn’t a stringent multifamily or renter’s market that will make your sales either successful or not successful.
There will always be buyers looking to rent, no matter the state of the market.
This means investors have more control over multifamily markets, making their financing dollars go toward a better purchase.
4. Less Risk
When you buy a multifamily property with a loan, you’re posing fewer risks as opposed to traditional homes. What if the tenants vacate? If you invest in a home, this responsibility will fall on you if you don’t get a buyer.
But what if a renter vacates? While this is unfortunate, you may still have plenty of trusted buyers in the property. In addition, it’s easier to fill that vacated unit with a new renter as opposed to a new home buyer.
5. Little Competition
While competition is inevitable, it’s still an inconvenience. This is especially true for investors, who spend their money and loans to flip homes, only to risk another investor in their market taking customers away.
There’s less competition for multifamily homes and properties. Buying an apartment or condo complex and getting a multifamily loan is easier than you think.
This is largely an untapped and trending market, helping investors achieve success.
Your loan money will go to good use while you drive profits.
6. More Opportunities
This may seem like a drawback, but there’s actually an advantage to owning multiple units.
Multifamily properties are versatile. The most popular examples are apartments and condos. But investors can turn their units into other business opportunities.
This includes Air BnB, a cozy bed and breakfast, or short-term apartment rental for temporary tenants such as students and expats.
You’re limited when you invest in homes. If you take out a multifamily loan and invest in multifamily properties, there are many ways to turn a profit.
7. Higher Loan Limits
Investors have many multifamily loan options. You can opt for conventional financing and even an FHA loan. Regardless of which one you choose, you have a higher loan limit than you do with a single-family property loan.
For example, FHA loan limits for four-unit properties are $605,525. Limits are even higher for conforming loans; the loan limit for a four-unit property is as much as $931,600! A single-family home loan has a limit of $314,827.
8. Easier Property Management
Let’s say you decide to invest in only one multifamily property. All of your units are in the same vicinity.
This makes it easier to manage your property, as opposed to managing different homes all over town. All of your issues and requests are streamlined in one area.
This also makes property management easier on yourself. You don’t have to worry about traveling to different homes in a given day.
What if you decide to invest in several multifamily properties? You’re still making a good ROI on your loan since your properties aren’t as widespread as homes, so you make better money and are still able to better streamline your management.
9. Better Help Paying Back Your Loan
Even though multifamily loans boost a great ROI, there’s no denying you have to pay that loan off. Fortunately, you receive better help paying off the loan with multifamily tenants than traditional home tenants.
You can rent out multiple units to tenants. This means you receive that extra rent money and that can help you pay off your mortgage. In addition, you’ll receive steady cash flow and the extra funds can cover other expenses for your property.
Take a Multifamily Loan and Invest in Property
Do you want to get into property investments? If so, consider multifamily investing.
Multifamily properties are becoming a new way to live and are popular amongst tenants. But before you start investing, you need to take out a multifamily loan.
There are many benefits to taking a multifamily loan. You receive a higher loan limit, receive a better return, and the money you make from your tenants can help toward other expenses.
If you want to get into property investments, multifamily properties are the future!
You should checkout Precondo if you’re looking to invest in a condo