• Embed Doc
  • Copy Link
  • Readcast
  • Collections
  • CommentGo Back
 
The Pros and Cons of Multifamily Property OwnershipFor whatever reason, multifamily property is often the first type of investment real estatefirst-time investors purchase. Perhaps it's because they at one time rented an apartmentand therefore feel comfortable with owning one.Regardless, apartment ownership is popular amongst real estate investors and common toreal estate investing.Multifamily property is any rental property that has more than one family unit. Thesmallest would be a duplex (two units), while larger rental complexes could easily consistof hundreds of apartments. In other words, there's no upper limit to the amount of units. Not unlike any real estate investment, however, multifamily housing offers real estateinvestors both, advantages and disadvantages of ownership. Pros and cons. Things thatwould make a real estate investor shout for joy about apartment ownership, and other things that at the same time perhaps would make real estate investors bemoan the daythey became a landlord.In this article, we'll consider a few of those advantages and disadvantages, and as a added bonus, discuss the best way to finance this type of income property.
Advantages of Ownership
By owning multifamily property, the investor grows wealthy in the long run simply byholding onto the property and letting the renters pay off the mortgage. Even with noimmediate cash flow, a multifamily property owner virtually gets to use other people'smoney to pay down his or her debt each time a rent check is collected.Secondly, downside risk is limited because multifamily properties serve a basic need.People have to live somewhere, and for any number of reasons, in any community thereare always people ready to rent. Moreover, when there's a shortage of apartments, property owners can be more selective about the type of tenant they rent to, vacancyfactors approach zero, and rents generally increase.
Disadvantages of Ownership
Perhaps the biggest disadvantage of investing in multifamily property is because theyinvolve tenant issues. It's never fun having to resolve tenant conflicts, or having to evict adeadbeat tenant.Also, because all rental apartments thrive or die due to other people's money, when arental market shifts to the point where there is a shortage of tenants, then owners can nolonger be as selective about tenants, might experience higher vacancy, and might have toreduce rents. For this reason, because they depend on renters to meet their debt service
of 00

Leave a Comment

You must be to leave a comment.
Submit
Characters: ...
You must be to leave a comment.
Submit
Characters: ...