When starting out in real estate, most people start small. It is not at all uncommon to start investing in single family housing and move into multifamily by way of duplexes and triplexes before they take the big leap into major multifamily properties. People are less intimidated by smaller properties, with the idea that small investment means small risk, and if you’re investing on your own, this is the way to do it. It is an easy way to get your feet wet and to see if investing in real estate is really for you. But for those of you who have been investing for a long time, we think that it is wise to invest in larger multifamily properties, and here is why!
Investing in single family dwellings is a wonderful place to start, but the management and upkeep of those homes is far more involved than you’ll ever imagine and in the end, it doesn’t always turn a profit. It is hard to deal with property mis-management, turnover, and routine maintenance. When you’re dealing with any less than 70 units, you normally aren’t making enough in rents to hire someone to handle your headaches, and so you have a headache all the time. This changes when you are dealing with 100+ units in an apartment building. You have onsite staff who are there to help, manage, and contain. This frees you up to do what your best at, invest.
The other thing that eats up a lot of time when you are dealing with single family homes is marketing. When you experience turnover, you have to work so much harder to fill vacancies than you do when you are invested in a multifamily property. The marketing for commercial properties is much more organic and straightforward than when you are dealing with a single property. The rigorous screening process that is involved in commercial real estate through a highly reputable property management company, gives you more security in your tenant base, and you don’t have to worry about turnover because word of mouth, drive bys, and other subliminal marketing tactics are in place without you even having to try. You have in place a great property management team that will manage the marketing, keeping your high occupancy in place as well as execute the other key operational aspects of the property.
The other advantage of investing in larger apartment complexes is that they’re often purchased with private equity or capital that’s raised through the use of a syndication. Real estate syndication is an effective way for investors to pool their financial and intellectual resources to invest in properties and projects much bigger than they could afford or manage on their own. The syndication protects the investors in the deal and it also protects the fundraiser in the event that things don’t work out. It’s essentially an insurance policy on the deal.
If you are interested in investing in multifamily real estate, let us know! We are a commercial real estate investment company that deals in multi-family properties in the B and C class assets. We provide real estate investing not only in North Carolina, but also in South Carolina, Georgia and Florida. We are true investment professionals who are committed to the long term and properly managing assets. We focus on building relationships every day, every step of the way with everyone we meet. So head to our contact page and let us know how we can help!