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A Hard Money Borrower's Guide to Multi-Family Properties

Posted by Loan Closed

A Hard Money Borrower’s Guide to Multi-Family Properties

When multi-family properties are a better investment than single-family homes.

An area where hard money can be helpful is in getting a loan quickly against a multi-family property. Multi-family properties are buildings that consist of four to five separate family dwellings. A study by the National Multifamily Housing Council showed that 63% of all rental properties are multi-family properties, while only one-third of them are single-family homes.

Multi-family properties provide a great investment opportunity because the amount paid in rent typically far exceeds the cost of mortgage and upkeep. This allows the landlord to earn a profit with minimal effort. The high upfront cost of a multi-family dwelling might cause sticker shock, but the per-unit price is actually much lower than it would be if you were to purchase a single-family property. Whether you’re seeking out a residential complex with commercial spaces or an apartment building, you can use hard money loans to finance your purchase.

Advantages of Investing in Multi-Family Properties

Multi-family properties generate a strong cash flow each month, even if there are vacancies or tenants who are late with their monthly payments. For example, a 10-unit property would only be 10% unoccupied if a single tenant moved out. On the other hand, a single-family rental would be 100% unoccupied and produce zero income if the tenant moved out.

When tenants move out of a multi-family property, it gives you a chance to repair and renovate the unit if needed. It also allows you the time and opportunity to find high-quality tenants, so you’re not just accepting the first applicant who comes through the door.

Investors who want to develop a large portfolio of rental properties can build their portfolio relatively quickly by purchasing a multi-family property. Rather than acquiring 20 separate single-family homes, for instance, an investor can acquire a 20-unit multi-family property. This is far more efficient because you don’t have to work with 20 different sellers or acquire 20 different loans, as you’re purchasing a single property.

Having a multi-family property also enables you to hire a property manager. In exchange for a monthly fee, property managers oversee the day-to-day aspects of managing the rental, including collecting rental payments, screening tenants, maintaining properties, and carrying out evictions.

Whether you’re new to investing in commercial real estate or you’re a seasoned real estate investor looking to expand your portfolio, multi-family commercial properties offer a solid investment opportunity. Multi-family properties are advantageous because they give you great potential in amassing capital and allow you to quickly grow your portfolio. 

Get a Hard Money Loan to Buy a Multi-Family Property

Avatar Financial Group is a hard money lender based in Seattle, WA. We offer hard money loans between $1 million and $10 million to borrowers nationwide. We serve urban and suburban markets nationwide (excluding Nevada), with a population over 250,000.

As a quick response commercial hard money lender, Avatar Financial Group is positioned to meet your needs at a time when there’s a lack of credit availability for real estate investors and small business owners. We are a direct lender – we aren’t brokers. Contact us today for more information about our rates and terms, or apply now!



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