Multifamily Real Estate Investing: It’s Grey in Hue

Multifamily Real Estate Investing: It’s Grey in Hue

 

Somali Mukherjee

 

 

Investing in real estate is one of the best known phenomena now-a-days. It encapsulates the ownership of a great deal of rental properties. On the one hand, properties having only one residential rental unit is generally termed as single-family properties. On the other hand, high-rise complexes having manifold rental units are identified as multifamily properties.

Therefore, when an investor spends an amount in real estate properties for the sake of the residence of many families, from which he can earn a huge profit, the notion of multifamily real estate investing receives its birth.

The merits of the idea of multifamily real estate investment are, namely, enhancement in the flow of cash, less risk in the case of tenants, less number of loans, fewer numbers of insurance policies, stable valuation, less contestation etc.

First and foremost, the most evident advantage of this idea is enhancement in the flow of cash. If you are experienced in real estate investment, it will definitely work as a source of great inspiration to you.

Second, this concept refers to less jeopardy in the case of tenants. The risk refers to that of vacancy. When you are housing manifold different tenants, the risk of complete vacancy will be meagre in comparison with housing single families. That is to say, with multifamily real estate investing system, you will have some source of income almost always. 

Third, you may find it a headache to manage manifold loans. However, in the process of managing multifamily real estate investment system, you will have to deal with one loan only, though there may be a number of units.

Fourth, it includes simple and single insurance policy. Yes, it is true that you will have to opt for an expensive insurance policy; still there will be only one. In other words, you will not have to deal with a great many insurance policies.

Fifth, the multifamily real estate investment system usually does not lose stable valuation. That is to say, it does not incorporate the fluctuating valuation of property with the passage of time. Actually, in this investment, capitalisation rate matters most. It refers to the fact that the prices in these cases are marked almost exclusively in accordance with the potential of the purchaser.

Sixth, the acts of purchasing as well as renting single-family homes are getting higher and higher. Hence, it will definitely be easy for the investors to earn money.

Now let us focus on the demerits of multifamily real estate investment. The disadvantages are, namely, great expenses, time management, want of experience, complication, availability, rules and regulations etc.

First, be careful about whether you are a novice or a veteran in this matter. If you are experienced, then you are flawlessly welcome to proceed, but if and when you are a newcomer to this investment, you have to be very watchful about the high expenses of this system.

Second, in this case, you will have to handle a great number of different tenants. Therefore, you will have to arrange for different schedules. Hence, you will have to manage more time.

Third, want or lack of experience is certainly a great demerit in multifamily real estate investment policy. In other words, until and unless you become a veteran, you will have to step very cautiously.

Fourth, multifamily real estate investment systems are complicated by nature and in character, because strange happenings may be rampant in this. Suppose that you have handed over one of the units to a noisy tenant. Consequently, that particular tenant may cause serious and lots of mayhem. As a result of this, the other tenants will feel vexed.

Fifth, because of a number of causes, multifamily real estate investment may pose you a tough time in searching the actual property. This is indeed one of the cons in the system.

Sixth, the landlords have to handle a number of rules and regulations in case of renting the multiplexes. Therefore, you need to be a bit vigilant regarding the rules and regulations of the country.

Thus, multifamily real estate investing changes the lives of the investors up to a certain level. That is to say, they are having the advantage of earning a regular income for the respective period mentioned in the rules and regulations contained in the agreement. Again, the income of the investor is stable. Thus, some of the investors become highly rich. However, because of some unruly and ill-mannered tenants, who do not pay the rent in time following the agreement, this system creates headache in the lives of the investors, resulting in some of the novices fall victims to such system.

Therefore, we may point out that just as there are merits, there will be demerits in the system as well as in the changing lives of the investors as well. Life is neither black nor white; it is rather grey in hue. Thus, we may conclude in the words of William Blake, “Without contraries is no progression”.