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”.
