Posted about 2 months ago

Boost Your Income With Multifamily Investing

Every real estate investor wants more cash flow from their rentals. They focus on increasing rental income but ignore reducing operating expenses. The principle of economy of scale states that the total operating expense of a rental property does not increase proportionally with the total number of rentable units. The economy of scale dictates that the operating expense of one 10 unit multifamily rental is much lower than the total operating expense of 10 separate single-family rentals.

  • Capital expenses do not scale with the number of units.
    • For example, the cost of replacing the roof of a 10 unit apartment is not 10X the cost of roof replacement for a single-family rental.
  • Advertising costs do not scale with the number of units
    • It is not 10X more expensive to advertise a 10 unit apartment than it is to advertise a single-family rental.
  • Insurance cost does not increase in proportion to the number of units

  • Property taxes do not increase in proportion to the number of units

  • Property managers charge a lower fee for bigger apartments
    • Property managers charge >10% for single family rentals. <5% for larger apartments.
  • Price per unit of a multifamily property is much lower than the price of a single-family property
    • Builders also enjoy the economy of scale. They pass on some of the savings to buyers.
  • Multifamily Rentals have fewer vacancy losses
    • 100% loss in income when a renter moves out of a single-family rental. Only 10% loss for a 10 unit apartment.

Do not stifle cash flow by investing in single-family rentals. Be smart. Leverage the economy of scale. Invest in multifamily apartments with Passive Real Estate investing.


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