If you’re like many investors, you’ve considered purchasing a multifamily property. But is it right for you?

Should You Invest in a Multifamily Property?

Many investors wonder whether they should invest in a multifamily property or a single-family home. Although there’s no one size fits all answer, a multifamily property may be the right choice for you. These types of properties often carry several advantages, including:

  • More income
  • Scalability
  • Lower risk

Here’s a closer look at each.

Benefit #1 of Owning a Multifamily Property: More Income

A multifamily property has the potential to let you bring in two, three, four or more streams of income. It just depends on the number of units in the property. Some investors also choose to live in one unit while renting out the others, and this can be a smart strategy because the rental income from the remaining units can cover the entire loan payment.

Related: How does a hard money loan work?

Benefit #2 of Owning a Multifamily Property: Scalability

If you’re looking to the future and want to expand your investment portfolio, multifamily properties may be the way to go. You acquire separate investment each multifamily property you purchase, so you can own a significant number of units in a relatively short period of time when compared to purchasing one single-family home at a time.

Related: What are the requirements to take out a hard money loan?

Benefit #3 of Owning a Multifamily Property: Lower Risk

Though it may not seem like it, owning a multifamily property can pose a Lower investment risk. That’s because you have the opportunity to rent out more than one home, and if you’re located in an area where there’s significant demand, you may be able to fill all of them. but even with only one or two units rented, you still have some form of an income stream. If one tenant moves out, you still have the others making rent payments.

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