Florida Property Development has a traditional approach to its business, trust, and respect. This approach has resulted in productive long-term relationships with its partners, lenders, contractors, consultants, and Florida agencies. This perspective extends to all our actions and interactions, looking to generate value in every deal for every participant.
IS MULTI-FAMILY A GOOD INVESTMENT?
A multi-family is any property that has more than one unit.
A multi-family property is considered relatively "safe" investment compared to other real estate asset classes. That is because even during an economic downturn, people needs somewhere to live. In fact, during a recession, many people find themselves forced to sell their homes and move into rental housing, instead.
The cost per unit is typically higher for single-family than multi-family investment properties. When you consider the cost per unit, however, multi-family properties typically come out ahead. In many cases, the lower cost per unit can provide the investor a higher return.
MANAGING THE PROPERTY
With real estate investing, there is much more to success than just making the right purchase. Property management plays a huge role in the success of an investment.
On a per-unit basis, multi-family properties are typically easier to manage. Multiple tenants share the same roof and many mechanical items.
You will likely find that a property manager fee is less with multi-family than with single-family rentals.
Multi-family investments are simpler to manage, cheaper in the long run and provide the best return on investment versus single-family.
PROPERTY VALUE
Multi-family Properties are almost entirely based on the cash flow. The market will determine an expected rate of return on a multi-family property, which will determine that property's value.
One common method of determining the value of a multifamily property is using the capitalization rate. A capitalization rate is the ratio between the net operating income that is produced and the original capital cost or the current market value of the property.
Net Operating Income/Cap Rate=Property Value
The value of multi-family properties are impacted as much during the downturns in the real estate market. The property values are relatively stable.
"Successful investing is about managing risk, not avoiding it."
