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How Is Managing & Investing in Multifamily Properties Easier Than Duplexes?

Posted On Monday, 28 February 2022 19:57
How Is Managing & Investing in Multifamily Properties Easier Than Duplexes?

Every real estate investor dreams of having those beautiful downtown townhomes in the galleria that could create a really good income for them. But there is so much more to consider than beauty while making such huge investments. No matter where you anchor down your property investments to enjoy the benefits your real estate vertical has to offer, it will require a commitment of time and effort to keep those rentals and tenants get by without much hassle. It is easily thought that starting with a single house or maybe a duplex atmost will minimize the investment risk, let you pilot run, and try out the A-Zs of real estate pros and cons. 

However, that’s not true. First and foremost, if you are looking to invest in real estate and generate a considerable amount of cash flow, investing in multifamily properties will not just create a steady revenue stream but will also add value and eventually help you expand your real estate portfolio. Another benefit of multifamily properties is that you will get multiple units through just one closing. We all know the hassles of phone calls, paperwork, and bureaucracy while trying to close property deals. The best thing about this model is that it will provide multiple streams of revenue that won’t shut altogether ever.

Coming back to property management, the hassles that come with managing a property might lead you to believe that it wasn’t for you. In contrast, if you hire a property manager, they will take at least a 10-12% cut out of your real estate income for part-time if not a full-time salary. Minus that from cash flow generated by a single house/apartment or a duplex, the track isn’t going to look promising. 

Let’s say each unit generates $2000 a month. A part-time 10% - $400 cut will not fare well for your property or your tenant. Following this management model will lead to situations that are highly likely to make your tenants unhappy or incur property damage. A person working for such a meager amount will be taking multiple jobs, be negligent or even resort to malpractice. On the other hand, having a full-time manager, even at a not so posh location, will cost a minimum of $10-$12 per hour for an eight-hour shift. This will almost certainly eat up a whole single unit’s rent.

How multifamily properties benefit on the contrary.

A quadruplex might generate enough revenue to allow you to hire a qualified property manager and subcontract maintenance that can be overseen closely. Four units can be considered the most basic form of managing a multifamily investment. Going up the ladder, investing in multi-family properties can be based on several strategies. It can ensure high returns and add enormous value to your entire property over time if devised smartly. Such properties can also be much easier to dispose of than occasionally non-performing single-family houses.

Another huge benefit of investing in multifamily properties is that you will only operate from a single base. Doing so reduces management activity significantly. For starters, the manager will mostly be onsite in an office instead of plying between single houses in different locations to collect rent or manage repair and maintenance works. 

Such ease will not only increase efficiency in management but will also reduce overheads significantly. While the time saved can be used fruitfully, the expense and transport accounts won’t be taking much of a hit either. 

Multifamily properties also let you save a lot in property maintenance and taxes. A single layout designed with the same type of hardware will be easier to source and maintain while saving significantly on several fronts.

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