Why Investors should purchase Multi-Family Homes in Utah?
If you asked five different investors what the best real estate investment strategy is, I am sure that you would receive 5 different answers (every one being a viable strategy). While some may prefer subdividing land or a fix and flip strategy, I prefer the buy and hold strategy, particularly with multi-family homes.
While multi-family home investing is not a “get rich quick” plan, I do feel like it is the best long term solution to building wealth through real estate. You may be asking, “why multi-family properties instead of single family homes?” My answer to this question is simple – risk management. Below are some of the greatest benefits that you will experience by investing in multi-family properties compared to single family homes:
- The cash flow should be greater – Due to the fact that you will have multiple rents coming in for one property, your cash flow should always be greater for a multi-family property compared to a single family home.
- Risk of vacancy – If you have a tenant that moves out of your single family home, you are receiving no monthly income and are operating at a negative cash flow until another tenant moves into your rental property. If this takes several months, you will have suffered a significant loss that will you will never be able to recoup. On the other hand, if you have one tenant move out of your multi family property, you still have income coming in for the other unit(s) while you fill the vacancy. This will still negatively impact your monthly cash flow until the vacancy is filled, but not nearly as much if you were receiving no monthly income at all.
- Property management potential – Since your cash flow should be greater on a multi family property, you may now be able to afford a property management company to find great tenants and manage all other day to day aspects of managing your investment. This will allow you to focus your time and energy on finding other potential multi-family properties to invest in.
- Economies of scale – If you purchased eight single family homes throughout Utah, you would need to manage eight different tenants located in different locations. You would also have the risk of eight different roofs needing to be repaired, eight different air conditioning units that would need to be managed, and eight different yards that would need to be maintained. On the other hand, with an eight-plex you would get the benefit of the eight tenants, but they would all be located at one central location when responding to maintenance issues. You would also only need to maintain one roof and one yard, thus significantly reducing your risk.
Multi family investing can be a very attractive option to an owner that would prefer to hold the property for the long term. If you would like to discuss investing in real estate or would like to have your multi-family property managed, please consider hiring FRE Property Management. We are the premier property management company in Utah and will provide you with the peace of mind knowing that your investment will be taken care of. Contact us today at 801-673-5692.