Multifamily real estate, is widely considered one of safest, and most profitable investment. Once you understand the key advantages if strategy find it difficult to go back into smaller properties. Here are just few of advantages:
1 – Valuation
Multifamily properties have valued on income. NOI specifically – which stands for Net Operating Income. Think of each property as business, the revenue and expenses involved operating there assets. The more can increase the income, the more property, is worth. You can increase NOI by decreasing expenses or increasing revenue. Single family properties, other hands valued based on comparable approach. Their value is derived from similar home sold nearby.
2 – Recession Proof
Historically the multifamily asset class, has been extremely resilient it market downturn. When is mark correction/recession people tend, to downsize and become renters. Since multifamily rent are typically 1-3 bedroom units the remain very affordable and still in high demand the stage of economic cycle.
3 – Economies of scale
Costs are lessened when purchasing, managing and maintaining multiple units under one roof. Also purchase materials in bulk and afford to hire employees/property management.