A residential property with more than one family residing in it is regarded as a multi-family property. A house with three portions or a building with 500 apartments is considered multi-family property. The families living in a multi-family property may or may not be related to each other.
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Types of Multi-Family properties
A duplex is a structure that only has two floors, and a different family resides on each floor. Both the families have a separate entrances; however, they share the garden and the garage area. There are also triplex or quadplexes with three and four floors, respectively.
Townhouses are identical houses made within the same boundary wall. The townhouse is sold separately and is solely owned by a single family or an individual. The families living in a townhouse have their separate house and entrance; however, the house’s exterior is shared by the other residents.
An apartment building is a structure that has multiple floors, and each floor has one or more units. The units are sell or rent out separately, and an apartment building usually has various families residing in it. Many apartments also have commercial shops or restaurants and are regard as multi-purpose apartments. An apartment community refers to an area with several apartment buildings developed by the same owner. Read more about capital smart city.
Investing in multi-family properties
Along with being an excellent place to live, multi-family properties also act as a worthy investment. Multi-family properties are also great for generating rental revenue and are hence prefer by most investors. Here are some reasons why investing in a multi-family property is a great investment decision
It is easier to finance
The cost of purchasing a multi-family property, for example, an apartment, is generally higher than that of a single-unit property. In this case, you may think that the optimal investment would be to purchase a single-family home; however, that is wrong. Despite costing more multi-family properties are easier to finance. Banks and other private lenders are more likely to approve a loan if used to purchase a multi-family property. Compared to a single-unit property, the multi-family property can generate more rent and hence the investor gets more cash flow. In a multi-family property, there are numerous tenants, so even if one of them leaves or fails to pay the rent, the investor will still have the other tenants. Therefore, the multi-family property is more reliable.
Easier to develop a portfolio
If you want a portfolio with multiple rental units and tenants, the multi-family property is your best option. It is easier to buy a building with 20 apartments giving you 20 tenants than to purchase 20 separate single-family homes. Apartments and other multi-family properties are safer to buy as they need less inspection. While buying a house, you will have to inspect it physically and study the market of the area it is located in as it will determine its future value. All these things take up the investor’s time and effort. You can also buy the entire building under one mortgage agreement, whereas you will have to deal with multiple lenders for single-unit homes. The chances of multi-family property foreclosure are also lower than other properties.
Easier to Manage
Purchasing a property is not the end of the job; you will also have to manage it as an investor. Managing the property includes looking over the property and dealing with the tenants. It is not economical to hire a property manager for a single-family home. However, hiring a property manager makes sense and is more affordable if you have a multi-family property with numerous tenants. Invest in 1947 Housing.
Multi-family properties have become increasingly popular among both residents and investors. Before purchasing any property, you must study the market and do the required calculations to see if it is an optimal investment.
Ramza Zahra is a Karachi-based freelance content writer who uses her life experiences and curious nature to research and pen it down and make a living. Currently, she is working with Sigma Properties as an Snr. Content Writer.