As real estate agents, we need to understand the complexities and nuances surrounding every type of housing. By acquiring this knowledge, we open our rental property portfolios to more success and profitability. Multifamily housing is a popular living space choice amongst many people. But what does multifamily house mean and what are the benefits you can gain from investing in these real estate properties? This is what we will be discussing in today’s blog.
What Is A Multifamily Property?
A multifamily property is a building that is made up of two or more housing units. Other names used to refer to these types of housing are multi-unit housing or multi-dwelling units (MDUs). Multifamily housing is a common choice among those looking for affordable housing options, and so can be found in all types of settings, including urban, suburban, and rural areas.
The Different Types Of Multifamily Properties
1. Apartments and Apartment Complexes – These are the most common type of multifamily homes. They are large buildings with multiple floors of units. Most of them also include shared amenities such as a swimming pool, gym, and laundry facilities. Apartment buildings can have stories ranging anywhere from 2 (low-rise) to 13 and above (high-rise).
2. Condominiums – These are comprised of units that are individually owned, but are made up of a larger building overall. Owners of condominium units generally have shared ownership of the building’s common areas. Condominiums can either be joined together, with units that share walls, or detached from each other, with units that are separated by some distance.
3. Townhouses – These are similar in definition to condominiums, but the main difference is that they are attached to other townhouses on either side. Also, townhouse owners have their units to themselves as well as the surrounding land. This means that townhouse owners have more privacy than condominium owners, but less flexibility when it comes to making structural changes to their units.
4. Duplexes or Triplex – These are made up of two-unit or three-unit buildings with each unit generally sharing at least one wall. Each unit will have its own entrance and yard. Depending on how it is used, some units tend to have one unit occupied by the owner of the Duplex, while others will have both units rented out to tenants.
What Are The Advantages Of Multifamily Properties?
Given the popularity of multifamily property compared to single-family homes, there must be some key reasons why people choose them. Even for real estate investing, you must know why people tend to opt for multifamily properties so that your property management can be optimized for the best cash flow.
1. Affordability and Convenience
A multifamily property is often more affordable than choosing to live in single-family homes. This is mainly because units are shared under a single building, thereby reducing rental property costs and utility bills. This makes it a great option for individuals and families looking for affordable housing. Additionally, multifamily homes are often located in close proximity to local restaurants, shops, and public transportation.
2. Usage of Shared Spaces and Amenities
Tenants of a multifamily property get to benefit from both the privacy of their individual units, as well as the shared common spaces and amenities. These communal areas include meeting places, elevators, fitness centers, and swimming pools at no extra cost to the tenants.
3. Caters To Various Lifestyles
There is a range of different multifamily properties and you will be able to find one that fits your specific preferences and needs. Whether you want to rent or own the unit, find a temporary or long-term residence, or even if you want to choose between an urban or rural neighborhood, there are always options available to you.
4. Builds a Diverse Community
Because multifamily houses usually have more than one household living under one roof, this can often help foster a diverse community. People from different races, ethnicities, backgrounds, and lifestyles will be brought together under the same roof. This increases social interactions and cultural exchanges, and if that’s something you’re looking for, a multifamily property is the way to go.
Investing in Multifamily Real Estate
Before you invest in multifamily real estate, you need to know the factors that affect your purchase decision. Not every rental property is going to be successful, so you should carefully do your research before putting any money into these properties.
Here are some considerations for when you’re choosing your multifamily property:
- The size and number of units – The number of units will determine how many households you can accommodate as well as your potential rental income. The size of each unit also matters as it will decide whether you’re able to accept whole families or single individuals for each unit.
- The amenities offered – The amenities and services included with the property will affect its value. If the property has many amenities, its value will increase and so too will its rental price.
- The location – The location is another important factor that influences the property’s value. If it is located in a desirable area, you will be able to charge a lot more for rent when compared to more rural or suburban areas.
Real estate investing can be a lucrative business, but only with the right knowledge and practices. Learning about every type of rental property should be the cornerstone of every real estate agent’s portfolio. Multifamily properties are a common and popular form of investment among investors, so if you’re looking to invest in these types of properties, you should know that they are definitely a viable choice, even for new investors.