“Multifamily investments, particularly those based on value-based strategies have been eyed by real estate investors for years. The successful execution of a multifamily investment offers excellent risk-adjusted returns compared to other classes of real estate. Knowing how to execute them is not easy, that’s why we specialize in multifamily investment – because we know what to look for and how to optimize the property to create stable value.” – said Chris Hayne.
Chris Hayne – one of our commercial real estate professionals who is making a mark in real estate as a multifamily investment specialist. With many exclusive properties listed, he knows a thing or two about the multifamily industry and how to help investors find the right value in their properties using a unique set of strategies.
Recently he sat down with our blogging team to discuss the five best reasons to bet on multi family’s as an investment. “We often hear questions from new real estate investors –what type of real estate investment will work best for my portfolio? This is a valid question. Without the experience and practice, it can be difficult to know what mistakes to avoid that often plague new investors,” said Chris Hayne, Mobile Home Park and Multifamily Commercial Real Estate Specialist.
To get ahead in commercial real estate investment – here are the five best reasons to bet on Multifamily!
1. They Take Less Work to Buy
This bet may not seem like a benefit, but it is and I think most investors do not take into account the expense and time it takes for a person to amass multiple properties – as opposed to a 25-unit multifamily, or mobile home park. Even if you were to amass that many homes, imagine that you would end up dealing with the difficulty of multiple closings. Not to mention the fact that you would have visited all of the homes before putting in an offer.
2. Spread the Risk Over More Units
If you own a single-family home and it goes vacant for two months, guess who will be paying the mortgage – you. But if you own a 6-plex and two tenants decide to vacate, you still have four rents coming in to cover the expenses. “Multifamily properties allow the investor to limit their risk, by having multiple renters to pay the expenses. It lends itself to a strong revenue stream model that will sufficiently pay the expenses and generate cash flow at the end of the month,” said Chris Hayne.
3. Forced Appreciation Can Happen
Single-family homes are limited in how they build value – that is the “comps” in the market that drive the value of a property. What is a 2-bedroom loft selling for in downtown Vancouver? The home is compared to similar properties in the market and then valued on that basis. “Multifamily properties are unique because you have much more control over the value of the property and you can increase the appreciation by driving up the net operating income. There is no need to wait for the market to drive the value because you can drive a sound repositioning strategy for your investment, make some changes to the amenities, and give a better user experience. This will generate wealth in a very short time frame and a great reason to consider multifamily properties.”
4. There is Less Competition
In the real estate investment space, most themes surround the idea of fixing, flipping and wholesaling – strategies that focus on acquiring single-family homes, commercial investment properties and businesses. There is a lot of competition in these spaces which ultimately drives margins down, and profits suffer as a result. “The thing is the competition is not as fierce as when you are shopping for a single-family home and compete against thousands of buyers and buy a property for a significant increase because it has a cute porch. Buying a multifamily becomes more about the math and how to generate value utilizing the right strategy,” said Chris.
5. You might be able to Benefit from the Economy of Sales
Multifamily investing means smaller homes – apartments, duplexes or town homes. The more the homes, the more the walls, roofs, floors and stairs that require maintenance. However, for investors who have multiple homes to refurbish and renovate, there is a better chance of getting steeper discounts and being able to employ more professional firms that work on large scale projects instead of single homes.
“My hope is to have provided enough information to give you a good picture of what the benefits of multifamily properties area and how to make the right decision for your investment. This is something I stand behind as a REALTOR®– providing my clients with the right advice and ensuring that I have their best interest at heart. It’s about building trust and ensuring that I deliver the best value through the right advice and this is paramount to helping people look at purchasing a multifamily investment,” concluded Chris.
