Multi-family Investing Advantages and Disadvantages

(6+units)

We have many investors approach us and ask which type of property is the best investment.  I always answer this question with -what are your investing goals and what is your risk tolerance?

Each type of property has its own advantages and disadvantages and for every investor the ideal property will be different depending on their goals and risk tolerance.  Below we outline some of these for multi-unit buildings.

Advantages

  • Multiplier effect-income capitalization- for every $1 of extra net income =$16 in increased value of asset
  • Low risk investment
  • Less labour intensive
  • Economies of scale
  • Lower vacancy risk
  • Personal credit does not max out –does the property cashflow?
  • Low cost of borrowing- with current interest rates

 Disadvantages

  • Not very liquid
  • More capital required
  • High personal net worth required
  • Small supply of properties
  • Longer term wealth creation
  • Little cashflow at first- stabilization period (maximizing NOI, repairs, maintenance etc.

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