What are multi-family properties? What are the advantages of this kind of investment?
We teamed up with our agent, Eric Lambert, to answer all the preliminary questions you might have regarding multi-family properties.
We know that these sorts of real estate investments are often daunting and we want to demystify some of the basics.
Q: What Is a Multi-Family Property?
Eric:
Multi-family is a dwelling unit that has more than one rental-able space.
So, typically from residential unit, like a single family home, that has one tenant in it, this has multiple dwelling units that have anywhere from one to a thousand doors, or even more.
Q: What are the Advantages of a Multi-Family Investment?
Eric:
The advantages of owning multi-family, which I explain to most of my clients, it really comes down to the vacancy rate.
When you have a single family home, if no one is renting it for a whole month, you have a 100% vacancy.
If you have something that is anywhere between 1 and 4 doors and you are missing one unit, then you only have a 25% vacancy rate.
So, you have a better chance of keeping your vacancy rate low with a higher door count.
Q: What Does Vacancy Rate Mean?
Eric:
So, the vacancy rate is typically calculated by how many tenants are taking up the units at a property.
Therefore, if there’s 4 units, you’re going to have a 25% vacancy rate until you re-lease that unit.
