If you are looking forward to investing in real estate, it might do you better to know the difference between single-family homes and multi-family homes. Understanding the distinction between the two will let you know which is more advisable to invest in and which would be more profitable in the long run.

Without further ado, here are three reasons why a multifamily real estate property is a better investment rather than a single-family home.

1) Better Stability

When it comes to economic stability, your best option out of all types of commercial real estate is multi-family homes, not just over single-family homes.

People always need a place to live—homes will always be the last thing they give up. Cars or businesses will not amount to the value of homes. They always have to settle down somewhere, which is why multi-family homes are stable sources of profit.

If you invest in a single-family home, your profit will easily drop once a tenant leaves. In contrast, when you have a multi-family home, the loss of one tenant will still impact your profit but not as much as that with single-family homes. In addition to that, multi-family homes have a slower downturn when it comes to rates of rent dropping.

2) Higher Value

When you have a multi-family home, you have more control of your real estate value. This is something that professional investors greatly value, so you should, too.

Single-family homes are valued by using a comparative approach. This process means that if your house sells for $1,000,000, it will only be worth $1,000,000. Remember, the bank does not care about the potential of your property. Whatever the original value is, it will stay like that.

Multi-family homes, on the other hand, are valued using the income approach. This means that the potential of the house is considered—the more free cash flow the house can produce, the higher its value. Multi-family homes will give you control of your additional profit streams, optimize your expenses, and even raise the rent. It gives you the ultimate control over your property’s value.

3) Greater Cash Flow

Single-family homes can easily and will absolutely kill your cash flow. Your profit depends on your tenants, so your cash flow will be severely affected if they leave. This, however, does not really happen in multi-family houses.

Multi-family houses can free your cash flow because it contains more units. The expenses are spread out over these units, so your ratio of expenses per unit decreases. As you can see, you have a greater advantage in expense ratios.

Another thing to consider is management fees. With multi-family houses, you can improve cash flow because your management fees are notably lower, at only around 3 to 4 percent.

Final Thoughts

You must explore the most profitable option when investing. After all, real estate is a reliable source of passive income that can help you remain financially stable in the long run. Through multi-family home rentals, you will be able to achieve this goal as long as you make intelligent choices on when and where to invest.

If you are looking for a trustworthy Manitoba real estate agent to help you find the right property, you can contact Chris Low. He is an experienced real estate agent in Brandon, MB that can help you understand the community, competitive opportunities, and the various decisions you can make before you sign the dotted line.

Investing in land properties is one of the best decisions you can ever make. The land has so much potential—you can develop it, increase your home’s value, or leave it alone and let the price increase naturally. You have a wide variety of opportunities when you invest in land.

However, do take note that you have to do thorough research before you finalize your land purchase. To start, here are three key advantages of investing in land:

1) Steady Increase in Value

If you invested in land in a good location, it is likely to steadily appreciate in value. If you do not want to leave it alone, you can explore the numerous ways of utilizing it. Developing or leasing it is just one of the most common uses. Conduct research on what method can generate more income in the future.

Use your land according to the location. When you do your research on the area, check the businesses and establishments operating around it. Before buying, you can also determine the typical price of land in the region by researching.

2) Source of Passive Income

As mentioned, you can just leave your land alone and let it appreciate. You can increase your net worth without exerting effort. You can also create tourist attractions or rent to businesses so that the plot can generate extra income. You should conduct research and explore available opportunities to maximize the potential of your land.

3) Great Retirement Plan

Owning land can undoubtedly develop your personal finances for retirement. You should be creative with how you use it so that the price will increase when you sell it. You can also rent it out. 

Important Considerations

Now that you’ve thought about critical advantages, it’s time to think about factors to affect buying real estate. In particular, here are things you should consider when you are looking for a property for sale in Canada.

1) Tax Implications

It is best to look up the taxes related to the property you are going to buy. Seeking professional help is highly advised so that you can avoid financial complications. 

2) ROI Guarantee

Land investments are definitely worth it if you know the best strategies. Do thorough research on the variables that can affect your return on investment. Timing can be a significant factor in your ROI, so make sure that you calculate the value of the area, as well.

3) Investing Overseas

The rule of thumb when investing overseas is to seek professional advice. Whether on legal or land matters, you should have a contact in Canada. You also have to be mindful of scams that aim to steal your money. Some properties also have hidden expenses, so watch out for those.

Final Thoughts

Land investments are great if you know the best strategies. After all, like all investments, it comes with risks, so you have to approach it with care and caution. By exercising due diligence, you will be able to limit potential risks and maximize the returns.

If you are looking for homes for sale in Canada, you can contact Chris Low from ReMax Valleyview Realty. Our team will ensure your needs and requests are met, so you can get your target property soon! Let’s discuss what you have in mind—book a call today!