A Fast-Track Approach to Real Estate Investing

There is a multitude of ways you can go when it comes to investing, including but not limited to your usual stocks and bonds, T-bills, commodities, real estate, and so on. Of course, by now you’ve probably realized that multi-family real estate is by far superior in comparison to some of these other investment methods. What a lot of first-time investors don’t know though, is that even in the world of real estate, there are also better and more efficient ways to invest. Multifamily homes are in the category of better and more efficient but how do these compare to some other types of real estate investment?

The fixer-uppers 

This is one of the more popular real estate investments amongst first-time investors recently, especially with all the recent media attention. After all, who hasn’t had a recent chill moment watching DIY Channel shows related to home improvement? Forget about buying a fully functioning home, you could get your dream home at a much lower cost, add a few coats of paint and have a brand-new home at half the price. This can definitely work if you were looking at one property here or there and maybe for that one house you’ve always wanted but not when it comes to investments. Yes, the initial deposit may be much lower than multifamily but that comes at a cost. Shady and unreliable contractors are everywhere in that market, not to mention the amount of hard work you need to put in at every stage of the process. You also need to remember that even though these homes or properties require less initial capital, you are usually looking at a one-off investment with mid-range returns. With a multifamily home investment, you are looking at higher returns and a much longer return period. 

The single-family 

These are one of the more traditional ways to invest and are really a smaller version of the multifamily. The problem with these investments however is that it’s almost like putting all your eggs in one basket. One home equals one source of income. That means one revenue stream per house and if your tenant ends up unable to pay, you end up losing your revenue stream. You also have to consider how long it will take you to build a decent portfolio if you are looking at one single-family home at a time. With a multifamily home, you are looking at many more streams of income and you lower your risk per unit. No more worrying about the one basket, this time you have some sort of buffer regardless of the current market.

The multi-family

Ultimately, multi-family homes are by far the best investment on any risk adjusted basis. Investing through syndication is your best option. Though these properties cost millions of dollars you will be able to be a part of the deal, through the syndication model, with a minimum of $50,000 investment. With multi-family homes you have a steady cash flow because even when you lose one or two tenants you will still have an income from other tenants. You will be able to increase appraisal value by increasing the net operating income of the property. Unlike single family homes that the income is high at first but will decrease as time progresses. In multi-family homes your income increases as time goes by. 

At the end of the day, you are always going to need to consider the balance between your investment, your risk, and your return. Grab the opportunity to be part of an investment that costs millions of dollars but does not require you to invest millions. Want to know more? Contact us today and learn where else multifamily homes can take you!