ECONOMIES OF SCALE
Multifamily ownership avoids an economy of scale that you would not get with owning a single-family house because of the concentration of units. If you own a 20-unit apartment your transaction costs, management costs, and use of time and labor will be less compared to owning 20 single-family homes in different parts of town. The concentration of the 20 units in one location gives a tremendous advantage to multifamily ownership vs single family ownership.
BETTER MANAGEMENT AND LABOR
The affordability of management costs is good. A small size apartment like a 10-unit can be self-managed. the work is most times not as time-consuming as those of a larger size apartment building in which you have to engage a management company to effectively manage it. So even at the big size range you can still scale down in staffing and labor accordingly and be able to use your tools in relatively good proportion to cut down expenses and scale up on overall return on investment.
CASHFLOW AND APPRECIATION
When you own an apartment there are multiple leases in place and you step into a situation of a cash-flowing property right from the beginning the appreciation of the asset is in relation to the rental lease, so the more unit you lease out the more the value of the property.
TAX AND RECORD-KEEPING CONSIDERATION
In comparison to single-family homes, 20-unit apartment record keeping will be easier than 20 single-family homes. The filing of taxes and tracking of expenses will be easier to keep up with.
AFFORDABILITY AND DEMAND
A great benefit lies in the affordability of apartments as a choice for investors. This means they can afford to get into the capital city or major regional markets as the median price of apartments has traditionally been less than the median price of houses. Apartment living has become more popular over the last decade as lifestyle demands of being central to the city or major centers, of being closer to work, transportation, shopping, hospitals, universities, and the café culture has created a new demand.
By Ola Ibiwoye BPHARM, RPH
