Multifamily Investment Properties
Purchasing property for the purposes of an investment has advantages. A wise investment will provide good returns and possibly years of enjoyment in the business. Buying multifamily investment properties however may have disadvantages as well.
Some of the advantages of owning multifamily investment properties are following.
• Multifamily units provide for the basic needs of people.
• People always need a place to rent, in any community for many reasons.
• Another advantage is the investor becomes wealthy over the long run. Simply by renting the units in several multifamily properties, the investor pays off his mortgage using the money from the rent checks.
• A shortage of available dwellings allows owners to be selective in their tenant choices raising rents as needed and reducing vacancies.
There are some disadvantages of owning this type of property as well.
• A shortage of tenants due to a changing market sends owners problems. They can no longer be choosy about their choice of tenants, vacancies are higher and more frequent, and leasing rates are reduced.
• One cause of a low leasing market is rising of home ownership in a good market.
• Another problem is the management of an apartment complex can be demanding due to tenant needs.
Financing multifamily investment properties can be based on the leasing income. These income producing properties support the debt incurred. The lender considers the property first and the investor second in the multifamily purchase. In a single family or vacant property the financing is based on the investors financial strength.
In other words the lender evaluates the property according to its income from the renters. Any investor should present an accurate income and expense report and projections that show an increase in the future. Software available for investors helps them create the cash flow projections quickly.
For more information please call Nigel Walter chairman of Connaught Asset Management
