A multi-family home is any residential property divided into more than one housing unit for accommodating families. Building a multi-family home from scratch takes in quite the investment, which is why multi-family housing schemes are regarded as 'expensive'. But, it remains a safer investing opportunity for investors aiming to grow their capital but fails to overcome the volatility of the stock market. Renting out a multi-family home not only diversifies your investment portfolio but also enables you to generate a steady income.
Why Invest in Multi-Family Homes?
Each unit within the multi-family home consists of one or more bedrooms and living rooms, each with an attached bathroom and kitchen, respectively. Here are three reasons why investing in multi-family homes takes the lead over single-unit homes:
Expensive, But Easier To Finance
There's no denying that the cost to acquire a multi-family home is notably higher; we're talking millions in comparison to the thousands needed to secure a single-unit home. Contrary to popular belief, securing a loan for a million-dollar multi-family complex is much easier. The bank readily approves of this investment because it generates a fairly strong cash flow monthly.
Diversifying the Portfolio in Time
If you wish to build a portfolio of rental units, a multi-family home is your most suited choice. You can acquire 20 units within the multi-family house in one go, which is more time-efficient than purchasing 20 single-family homes. Moreover, you'll be taking on just one loan rather than 20 separate loans. Likewise, when selling out the property, you only need to sell to one potential owner rather than having to go back and forth with 20 sellers in 20 different locations.
Property Management Makes More Sense
Property management is not everyone's cup of tea, which is why several real estate investors resort to hiring property management companies to handle day to day operations of the rentals. This manager must be paid a percentage of the monthly income the multi-family home generates; this is easier to distribute when an average of 87 percent of multi-family units are rented. With a smaller portfolio, you don't have the luxury of hiring third-party property managers as it isn't too sound of a decision financially.
Types of Multi-Family Homes
There isn't just one kind of multi-family home; in fact, the number of rental units varies notably depending on the chosen type. Multi-family housings are based strictly on design. For example, a townhouse or row house has side-by-side attached houses, each with its private entrance. Alternatively, a duplex is dwelling units stacked onto each other or arranged side-by-side with separate entrances but shared parking areas, porch, and yards. Likewise, the triplex consists of 3 dwelling units, while the fourplex contains four dwelling units. The multiple units in a multi-family home enable homeowners to keep occupancy levels elevated.
Tips for Investing in Multi-Family Homes
While it's obvious that each housing unit in a multi-family house will have its own set of tenants, fixtures, and appliances, we're adding on tips for utilizing the opportunity for adding value to your residential property:
The best multi-family home investments are situated nearby apartment buildings. This is because apartment tenants who fail to rent homes, often see multi-family homes as more affordable options. Moreover, a good neighbourhood attracts more potential tenants and offers the multi-family complex a stronger growth on the market. The newfound construction by multi-family home builders is evidence that the real estate market is growing to its fullest.
A multi-family homes crafts an additional revenue stream for the homeowner, with added facilities of covered parking lots, high-speed internet service, or a coin-operated laundry. However, it's crucial to check the current rents in the market of the multi-family home you're purchasing rather than taking the seller's word for it.
Multi-family homes, regardless of being a duplex, triplex, or fourplex, allow homeowners to invest without facing the risks and problems of larger apartment buildings. A smaller housing unit is often affordable to buy.
A Multi-Family Home Development in Canada
NOVESTA is a construction firm dedicated to residential and commercial development to achieve client-focused success. We deliver projects in Edmonton and Calgary, Alberta, as well as Vancouver, British Colombia. Our multi-family residential development projects are planned strategically to enable you to reap maximum profits. You can even have a one on one with the construction team and design-build unit to discuss what drives the highly competitive capital investment market in Canada.
We've already hit the eight-year benchmark in real estate development, construction, and renovations, with a list of past clients that just can't stop talking about NOVESTA commercial and NOVESTA residential services.
The commercial construction and renovation team at NOVESTA specializes in development projects of all sizes; our most expensive project summed up to $25 million. We also have quite the record for completing on time and budget. Services under the commercial flag include commercial renovations and restaurant remodelling to cast a better architectural impression. Likewise, the residential projects executed by NOVESTA hit the bull's eye for being stylish yet functional developments. This comprises condo construction, multi-family residential builder, and residential renovations.