There always has to be a good reason for doing something and that reason has to be grounded in logic. It is with this approach that I will now take you through the benefits of investing in multi-family dwellings.
Let’s take things from the beginning. I own over 7,000 apartments in more states than I care to remember and yet I do not see a single tenant and do not deal with a single occupancy problem. How have I managed that? Well, it’s simple. Multi-family dwellings spread the risks of investing in real estate by increasing profits through multiple rather than one family renting one property. By grouping your investment together like this you spread the risk involved in empty properties. While one property remains empty others are bringing you money.
You also begin to acquire a certain bulk which allows you to achieve economies of scale. Getting a company to manage the day to day running of your single family dwelling, for instance, is quiet a tricky thing to do and it an also be expensive for just one property which may become empty for a couple of months of the year. Get into a multi-family dwelling situation however and the management costs go down, the risks of empty properties drying up your income streams are reduced and you also begin to acquire some negotiating clout whether it is with care-taking companies or building repair suppliers or even those firms which specialise in repairing buildings and working maintenance contracts for landlords.
Beyond that you build what every decent real estate investor considers to be vial for success: robustness and flexibility. You need some liquidity fast? No problem, your real estate assets can be sold without completely cutting off that income stream, by picking exactly which to keep and which to sell.
Is the real estate market slowing down? Again, you are protected. While people may find it difficult to buy or sell real estate they all need somewhere to live and that is exactly what you are providing which is why, provided you do not price yourself out of the market, your investment is shock-proof from the ups and downs of the real estate market.
While this may seem like a magic formula and, right now, you are probably wondering why you never thought of it before I can assure you it is not. You still need, as an investor, to have your eyes open, know exactly what you are getting into and try hard to minimise all the different risks you are exposed to. Chose your properties carefully, go for more than one and they will serve you well!
David Lindahl, also known as the "Apartment King" has been successfully investing in single-family homes and apartments for the 15 last years. He has rehabbed over 820 houses and currently owns over 7,232 apartment units. He is the author of three best selling books. Dave Lindahl is a regular guest speaker at CT REIA. Go here for the current list of upcoming real estate investing seminars in Connecticut.