There are numerous sub-types of apartments:
Low-Rise Garden Apartments
The benefits of owning a multi-family property can include the fact that the regular tenants
in your building are paying down your mortgage each month, thus reflecting more financial
equity in your personal financial statement. And, if the lease agreements are structured
properly, the tenants can also be responsible for maintaining the property and paying the
taxes and insurance as well, thus making your net operating income for the property even
much stronger. Below we have outlined more specific financial benefits for you:
Minimize Cash Flow Risks - If you own a 6-unit property and for some reason you lose
two of your tenants, you are still collecting 4 monthly rent checks to help you make your
mortgage payment while you look for new tenants. However, if you own and rent out a single-family
residence property and lose your tenant, you will be without any income to pay that mortgage
payment until you find a new tenant. You always run the risk of losing a tenant at some time or
another, but with multi-family properties you are able to better distribute the potential loss
amongst many tenants rather than just one. Because of this you are in a better cash flow position
and thus you may easily be able to afford to hire a property management company to take care of
the day-to-day issues and the maintenance that your property will require. This makes your life
as a landlord much easier. Top
Minimize Operating Costs - If you have a leak in the roof of your 6-unit building, you only need
to fix one roof instead of having six roofs in need of repair if you own 6 single-family residences.
This also applies to other common areas that require some maintenance costs such as lawns and walkways.
With a 6-unit property, 2-3 washers and dryers would be sufficient for all 6 tenants, whereas if you
were to own and rent out 6 single-family residences you would need to provide a washer and dryer for
each one of those homes. You can see how the operating costs can build up very quickly this way and
easily lower your profit margin.
Greater Demand - With bankruptcy filings and foreclosures at an all-time high, more and more
people are being turned down for financing for a home of their own. Additionally, the Generation X
populous are now leaving their parents homes and entering the work force. This makes for a high demand
for affordable apartment housing. Apartment housing is typically the first option for many people and
the last resort option for many others.
When you are looking at properties to purchase, pay close attention to the location and general market for that
area. You will want to avoid properties that are located in economically depressed or seasonal areas. Also, the
property should have acceptable aesthetic qualities to be competitive with market standards and have a minimum
occupancy of at least 85%.