When individuals consider investing in real estate, they tend to look toward single-family homes. The reason behind this impulse is simple: these homes cost much less than multifamily structures. In fact, investors can purchase a single-family dwelling for as low as $30,000 in some markets, whereas multifamily buildings can easily cost millions of dollars.
What may surprise some investors is that it can be much easier to secure financing for a multifamily structure than for a single-family home. This stems from the risks involved. Banks see multifamily structures as a source of consistent cash flow: even if the building has a couple of vacancies or tenants who miss their payments, the other units still provide cash flow. On the other hand, if a single-family home is left vacant or a tenant fails to pay, then the net income falls to zero.
For this reason, the likelihood that individuals will foreclose on an apartment building is much lower than with a single-family dwelling. As a result, banks see multifamily buildings as a less risky investment.
No comments:
Post a Comment