When you invest in a single-family house, you will cater to one tenant only. On the flip side, when you invest in an apartment building or a multi-family house, you will get rent from several tenants, which will lead to a high monthly cash flow. Apart from this, there are several other benefits of investing in a multi-family house like an apartment building.
4 Benefits of Investing in Apartment Buildings
1. Rent Demand is High
In the US, especially in Florida, the population is increasing every day, but there is hardly enough housing. As a result, the cost of a house is skyrocketing, and finding no other option, people are renting instead of buying. Also, in Florida, the price to rent ratio has increased to 18.3, which is moderately high, and this indicates that there is enough demand for rental apartments or housing.
2. Tax Cuts
If you want to avail tax benefits, you should highly consider investing in an apartment building. Because when you invest in an apartment building, there will be deductions in the mortgage interest rates, which will cut your real estate liabilities.
To get the maximum tax benefits, you should consult a tax professional. With the help of a tax professional, you can also utilize cost depreciation and segregation.
3. Risk of Property Vacancy is Minimal
You can ensure multiple income sources and steady cash flow by investing in an apartment building.
When you invest in a single-family house and the tenant leaves, the property will be vacant, and you won’t get any rent until there is a new tenant. But when you invest in an apartment building, there will be multiple tenants paying you rent. Even if one or two apartment units are vacant, you will get rent every month. Moreover, as young professionals or college students rent these apartment units, it is unlikely that the apartment units will remain vacant for a long time. So, the risk of property vacancy is minimal in an apartment building.
However, while investing in the apartment building, ensure that the building is in a demanding area.
4. Grows Portfolio
If you want to add more value to your real estate investment portfolio, investing in an apartment building is the easiest way to do so. Because when you invest in several single-family houses, you will have to apply for loans separately. Moreover, you will have to manage and inspect the house individually. All these will need significant effort and time on your part. However, for apartment building investing, you can finance it with a single loan. Besides, the hassle of maintenance is comparatively less compared to doing maintenance tasks for 30 different houses.
Conclusion
As investing in an apartment building requires more property management skills, if you are new to real estate investing, you should start with a smaller multi-family property.
