Buying and selling one or more of the 

seems to be a huge step for many people within the industry. First-time rental investors may find it as a  complex process. Multifamily homes are increasing its popularity due to several benefits, although there are also drawbacks and challenges when owning one.

Before you start buying or

, if you are a first-time investor here are some pros and cons you need to know about multifamily homes.

What is an Austin Multifamily Property?

A multifamily property is any structure that consists of more than one unit such as a duplex, triplex, and a fourplex. These are the common Austin multifamily homes.

Pros of Owning an Austin Multifamily Home

1. Passive Income

Owning an Austin multifamily home is a great way to generate passive income without doing much work. If you hire a property manager, the day-to-day responsibilities will become easier for you especially if you are a new investor.

2. Appreciation

Another great benefit of owning an Austin duplex - fourplex is appreciation. In comparison to single-family homes, you'll become more dependent on how the properties around you are valued. In multifamily homes, several options are available under your control. Your tenants can help identify what improvements your rental property needs. But if you are able to identify what needs to be improved within your Austin duplex - fourplex, this allows you to charge more for rent.

3. Cash Flow

One of the things why investors love multifamily properties is due to the cash flow it generates per month. In strong real estate markets, rents can somewhat be predictable and units can be easily turned over to ensure steady cash flow.

4. Risk Profile

Owning a multifamily home is considered to be a "safe" investment. In comparison with a single-home, you will be paying its mortgage whether it's occupied or not. With multifamily homes, let's say you have a fourplex and one is unoccupied, there are still three tenants that will be paying you which equals to cover your mortgage and various expenses,. Another factor is when an economic downturn or a recession happens, there could be events where people will need to move out, sell their homes, and move into a rental property instead.

Cons of Owning an Austin Multifamily Property

1. Competition

If you're a beginner, investing in a multifamily property can be tough especially if you are up against the competition. There surely are advantages for experienced investors. The key to finding a good deal if to negotiate better terms than them or partner with an experienced property investor to know the ins and outs of multifamily homes.

2. Price of Entry

The cost of investment properties is expensive but this also will depend on the area where you will be investing. Multifamily homes will generally cost bigger than single-family homes due to the rental units in the structure, but when done right, the cost can be balanced.

3. Dealing with Tenants

When it comes to owning a multifamily home, learn how to screen potential tenants. Some tenants will take great care of your home while some might tear up your rental property. You will also be facing situations of tenants not being able to pay rent. There are also transitional tenants that will be signing leases with you for a year. Attracting new tenants to your rental property can add up to some significant expenses.

4. Increased Management

The responsibility of being a landlord may be heavy for many investors. One of the solutions is hiring a property manager that you can outsource to take care of your multifamily property needs such as different tenants, leases, and repair and maintenance of your multifamily property.

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• Multifamily Homes in Austin (1)