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Multifamily real estate investing for beginners

Everyone knows that real estate is a good place to invest if you want your money to grow. But how do you get started? To a complete beginner, investing in multi-family real estate can be intimidating. You have no idea where to begin or who to trust. If you do your research, you’ll discover that it can be quite beneficial, but you must first do your homework and understand what you’re doing.


When you invest in real estate, it’s important to understand what type of property you’re getting involved with. While single-family house ownership is a popular investment option, multi-family real estate is another alternative that many individuals consider when considering this area.


Investing in multifamily properties can be a profitable venture, but it is not for everyone. Before you begin investing in these types of properties, there are a few things that you will want to consider first.



What is multi-family real estate investing?



Multi-family real estate investing, in its most basic form, is a method for creating cash flow from two or more income-producing properties. It’s a term that refers to an investment strategy that entails buying one residential property and then using the rent income to fund the acquisition of a second similar home.


The most common type of multi-family investing is buying a property and renting out the units as individual units. This is typically done with an apartment complex, but it can also be done with a duplex or triplex. The key to effectively managing these types of properties is to have a good property manager who can oversee the upkeep and any repairs that are needed.


You might have heard of people investing in “single-family homes,” but what about multi-family real estate? What is multi-family real estate, and why should you consider investing in it? 


There are three main types of multi-family properties: 


Duplexes – This are two individual homes that share a single piece of land. Duplexes can have separate utilities in some circumstances, although they’re more likely to share a single set of water and sewage pipes. Each unit, in any case, has its own entrances and, in most cases, its own heating, cooling, and electrical systems. A duplex can be a great way to get started with your first rental property. 


Rental triplexes – This is similar to a duplex, but with three units instead of two. You can buy these as standalone properties or part-and-parcel (“P&P”) with a single property. The P&P option will typically cost less than buying a single triplex, but it requires an extra step when it comes time to sell. 


Fourplexes – Four units share a building or structure, as well as the ground on which it is constructed. Typically, the four components are divided by walls or doors.


The basics behind multi-family real estate investing


Multi-family real estate investing is a way for investors to build up their portfolio. It can be the start of a profitable investment portfolio or you can use it to diversify your current investments.

TIP 1: In order to get started, you will need a down payment. Most lenders require that you have 25% of the total cost of the property as your down payment. If you only have 20%, you may need to consider other options besides a multi-family rental property. Some banks, however, may allow you to put less than 20% down with private lending. This can be especially helpful if you don’t have access to traditional lending sources. 

TIP 2: Be sure that you take the time to do your due diligence before committing to a multi-family deal. You want to make sure that the area is safe and in an area where people are looking for housing. That way, when it comes time for you to find tenants, they won’t have any issues with moving in and signing on a lease. 

TIP 3: In order to maximize your profit, try finding deals that include more than one unit. The more units that are included, the larger your return on investment will be if everything goes well. The downside is that these types


The pros and cons of buying multi family property


When buying multiple houses at once, there are quite a few advantages. The first advantage is the fact that your expenses will likely be lower. All of the bills and utilities will be paid for by the tenants, which means that you don’t have to pay for them. If your tenants take care of the lawn maintenance, then you don’t have to pay for this either.



* Higher yields than single family homes 

* More renters means more money 

* More cash flow 

* Lower risk than commercial Real estate investing 



* Maintenance costs can be higher than single family

* Larger investment may affect your ability to “manage” the property

* Less control over what tenants do with their property

* May need experienced contractors to handle repairs

* Can be more difficult to obtain financing


The Benefits of Multi-Family Real Estate Investing


The benefits of investing in multi family real estate are numerous, especially if you are a small investor. Here are the biggest benefits to investing in multi-family properties


  1. Provides Cash Flow Multi-family properties typically provide much more cash flow than single family homes. By taking on the management of multiple units, you can maximize your profits by collecting rent on all of them. 


  1. Providing Diversification is important in any investment portfolio, and with multi-family properties, you are diversifying your risks by spreading them across many different units and locations. You won’t have all of your eggs in one basket, and your income will increase accordingly. 


  1. Potential for Appreciation While not guaranteed, there is a potential for appreciation when it comes to real estate investments. While other areas of the market (like the stock market) don’t always rise over time, real estate has risen consistently since the early 1900’s due to inflation and population growth. This means that over time, your property will likely increase in value as well. 


  1. Potential for Cash Out Refinance When it comes time to sell your property or refinance it, you may be able to cash out on some equity from the property by refinancing it with


Build your passive income today. Click here for more information about investing in multi-family real estate.


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