One of the surest means of accumulating wealth over time is acquiring real estate properties. Keep in mind that this process can take months or even years. The chances of an investor earning above-average returns in this game takes patience and requires the investor to carry out his due diligence. It requires careful and proper analysis of the properties condition and location.
Investing in real estate is similar to investing in another type of asset and that is stocks. There are those investors who are in it for the long haul and prefer to buy and hold approach. There are other investors like day traders who prefer the buy and sell approach. Each method has its advantages and disadvantages. Factors such as transaction costs, tax rate structure, potentially higher returns should be considered before the investor makes decisions that will affect the available capital.
Let us shift our focus and examine the advantages of investing in multifamily apartment buildings over the ownership of single family properties.
The amount of time we all have levels the playing field of all investors. 'The smart investor therefore wants to make the best possible use of his time. It only makes sense that the purchase and then possibly the sale an apartment building requires less time than purchasing those same number of single family units individually.
The availability of these two types of properties will vary depending on the location. At any time of the availability of single family units would greatly exceed the number of available apartment buildings. While there are very many people in the market looking to purchase a family home, there are only a limited amount of investors looking to purchase multifamily properties. This balance suggests a liquidity of the multifamily apartment building market based on the simple principles of supply and demand.
When purchasing a property, there are always transaction costs involved. The burden of purchasing and apartment building is greatly reduced compared to purchasing the same number of single family units. It is a great saving of time, energy and expense.
There are other factors involved that will affect the efficient use of your time as an investor in multifamily property.
1. Concentration of units and focusing on specific areas will assist with the maintenance and upkeep of your investment in this apartment buildings.
2. If you eventually own enough property that you require a property manager, imagine the time saved maintaining a building of 12 units rather than 12 single family units.
3. Record-keeping tax purposes will be much easier for a multifamily apartment building as opposed to the same number of single family units.
4. When it comes to selling these properties, there are the obvious advantages and disadvantages and I will look at these in another article.
Briefly looking at the above comments, I believe the advantages of owning a multifamily property definitely outweighs the advantages of owning single family property. Without going into it, the limiting factors are always the availability of capital resources. Assuming that these resources are favorable, it is a far more efficient use of your time to look at investing in apartment buildings in fulfilling every investors goal of accumulating long-term wealth.