One target market in real estate investing is “Multi-Unit” complexes. The term Multi-Unit can include a variety of properties:
1. Duplexes: two residential units under one roof
2. Triplexes: three residential units under one roof
3. Fourplexes: four residential units under one roof
4. Multi-Unit Complexes: six or more residential units under one roof
The first 3 types, duplexes, triplexes and fourplexes, have similar qualities that attract savvy real estate investors:
1. There are automatically 2-4 lines of monthly income flowing in. This makes it easier to budget and manage cash flow.
2. Because the units are under one roof, there is only one roof, four exterior walls, and one foundation to maintain. Over time, this saves hundreds if not thousands of dollars.
3. Landscaping is usually minimal, so there is not a lot of maintenance to keep up a large yard of a single family residence. Most often, the property owner will contract to the best bidding lawn service company to maintain the landscaping.
4. There is a high demand for the type of living style made available for the renter: no exterior upkeep, no yard work, but the benefit of only sharing one or two walls with their neighbors.
First-time investors find it a good idea to start their investment portfolio by purchasing a duplex. They will often rent out one unit and live in the other until they move on to their next property. Depending on how much they are able to purchase the duplex for, they may not even have to pay anything on their mortgage as the renter may cover the whole amount. This is an excellent way to get started, as the investor can then apply the money that they would normally be spending on their own mortgage to additional purchases.
Multi-unit complexes can have even more advantages than the smaller duplexes. The biggest advantage is even more monthly cash flow due to more units rented. Most multi-unit investors hire a leasing company to manage these properties, thereby making them “hands-off” revenue. The lease management company will take care of attracting and screening renters, as well as all of the paperwork, managing repairs/maintenance, collecting rent, and exit procedures. The cost the landlord pays for these services is well worth it and allows the landlord to fully enjoy the revenue that is generated each month.
Other benefits of owning a multi-unit complex are:
1. Maximization of upkeep costs, such as roof, siding, windows, foundation. And, depending on the number of multi-units, if there are large repair items, discounts from suppliers and service providers are available, which means less cost per unit than single family residences.
2. Minimal landscaping upkeep. Again, this maintenance is usually bid out to the lowest lawn care/landscaping bidder and is reviewed annually to ensure the lowest cost possible.
3. Multiple renters under one roof, resulting in multiple lines of rent each month.
4. An unending target market of consumers consisting of people who range from first time renters, relocated business people, elderly who have downsized, single professionals, etc.
It is worth any real estate investor’s time to investigate the opportunities to be had by owning any multi-unit property. The benefits are great, and the long term upside is tremendous.