Advantages of Buying Multifamily Properties

One of the major advantages of buying multifamily properties is the ability to have control over the value of the property in terms of forced appreciation. Unlike a single-family home where the value of the home is going to be based on the value of surrounding property in the comps in the area. With single-family, you’re also going to be held down towards the buyers who will take on the property whether or not they like the cabinet's, whether or not it's on a quiet street regardless of how they feel about where the property is delegated towards the town or with the schools around.

A multifamily properties value, whether it’s 100 units, 50 units, or 20 units is going to be based on what you can do to increase the income of the property or consequently decrease the expenses of the property, ultimately looking to increase the bottom line and the net operating income of the property. That net operating income is what is going to be the value driver of your property. You'll take the net operating income and you'll use the out cap rate for the area and that will basically take and make the value of your property, so if you can go in there and increase rents, add pet fees, add-in for laundry hook-ups into the apartments. You could also find water savings to cut down on expenses or maybe you can cut down on maintenance or repairs or other outstanding expenses that are just being blown out of the water through poor management.

If you can increase that bottom line, that net operating income then you now have a much more valuable property. When looking at cash-flow with multifamily properties you have the ability to produce a gigantic amount of cash flow just by having more units and more tenants you immediately have the ability to bring in more income across the board and that ultimately is a huge advantage of owning multifamily properties.

With that comes scalability, with multifamily properties if you have 50 units, 100 units, 200 units and you have 100 units and one vacancy you're still 99 percent occupied, however, if you have a single-family home and you have one vacancy you are completely vacant. That is the huge difference between multifamily properties and single-family, two-family homes, and three-family homes. You are able to take the property and have more ability to have those economies of scale. You're able to have one maintenance guy for 50 or 100 units whereas for a single-family home you may need to have one maintenance guy, you could have a property management company that can handle a 100-unit property or you can have a management company that's going to handle a single-family home and for that you're actually going to pay more based on if you add a 100 unit because you're going to pay more of a percentage of your rental income for that single-family home constantly. You could have one roof for 50 units where you have one roof for a single-family home so your upkeep is generally the same, as crazy as that sounds.

Your ability to have economies of scale grows tremendously by the more units you have, along with that, you can take into account depreciation tax advantages, naming and, cost segregation. You can find ways to push your depreciation down into categories of 5, 7 and 15 years, I think at 15 years you can push off and increase your cash flow and push off your taxes for years to come just as long as you don't sell the property, that is a huge way that you can buffer your bottom line.

Click the link to learn more:
https://www.multifamilyfoundation.com/order-28415099