One way to diversify your investment portfolio and a great way to have a secure and steady investment is through real estate investing. Real estate over time has proven to be one of the surest and most secure investment channels. However, the investment option in this sector is diverse, hence investors faced with the dilemma of determining where to invest. The covid 19 pandemics also added to this uncertainty and dilemma. Nonetheless, multi-family homes are a suitable aspect to invest your money come 2021.
As the name implies, single-family properties are residential buildings with only one available unit to rent, while multi-family properties, is a single building that’s set up to accommodate more than one family living separately. That can range from a duplex, which has two dwellings within a single building, to homes or small apartment buildings with up to four units. (Buildings with more than four units are considered commercial properties.)
An investment in this aspect of real estate can be a very good one and real estate investors choose multifamily units over other aspects of the real estate market. The question now is why are multifamily properties a good investment for 2021? Below are four reasons.
1. Lower vacancy risk: Owing to the COVID 19 pandemic, a lot of businesses have closed down and a lot of people have lost their source of income and can not pay rent. As an investor, if you have only single properties, it means your home would be vacant and this could affect a lot of things if it stays vacant.
Investing in multifamily homes reduces these risks. With multifamily units, even if one or two units are empty, the remaining units can serve as support. If you do proper due diligence before buying a multifamily home, it’s very unlikely that you’ll have a 100% vacancy no matter the economic situation.
2. You can grow your investment portfolio faster: Multi-family real estate is also very suitable for property investors who wish to build a relatively large portfolio of rental units. It can help hasten the growth of your investment portfolio. As a property investor, it is more convenient and time-efficient to buy 20 unit apartment buildings in comparison to buying 20 single-family homes.
With the latter, there would be a constant need to work back and forth with 20 different sellers, and conduct inspections on 20 houses that are each located at a different address. You’ll only need to work with only one seller if you buy an apartment building with 20 units.
3. More people will be renting: The effect of the Covid 19 pandemic would leave a lot of people searching for rental homes instead of buying. The current crisis has forced many aspiring homeowners to delay their plans to buy homes. Since people can’t afford to buy homes renting homes would be the only option available.
4. They are easier to finance: Ordinarily, the cost of acquiring a multi-family home will be significantly higher than that of a single-family home. So you would expect that securing financing for a single-family home would be much easier. However, you are more likely to get approved for a loan to purchase a duplex or fourplex than a single-family home. They are easier to finance because the lender will be taking on less risk.
All sectors of the real estate industry have been one way or another affected by the coronavirus pandemic in 2020. However, as we get into 2021, investing in multifamily homes seems to be a very viable option.