We focus on acquisition of high quality multifamily properties. These opportunities offer short-term value as well as moderate risk profits.
At Southfields Equities our main focus is the acquisition of high quality multifamily properties. These opportunities offer short-term value as well as moderate risk profits.
The first advantage is cash flow. Cash flow on a multi-family (= apartment complex) is always greater than that of a single family. Simply because you have more rents coming in.
And the more units you have under one roof, the less risk you have. If you have a single-family house and you lose your tenant, you’ve lost 100% of your income. In some instances, this could be your entire profit for the year. If you had a three-family and lost a tenant, you still have two rents coming in to pay your expenses.
The value of a commercial property like an apartment complex is based on the revenue it generates, unlike single-family homes which are based upon “comparables” and market conditions. If the houses around your house were foreclosed upon and sold again for a very low price by the bank that wanted to unload them, then the value of your house is being brought down. Multi-family property values are based upon the property’s income and expenses, which tend to be more controllable and predictable.
Economies of scale are in multi-unit buildings. If you have six single family houses opposed to one six family, you have six roofs to be replaced or repaired, six lawns to be maintain, six tenants spread out through out the city. In your six-family apartment complex, you only have one roof, one lawn and your ten tenants are centrally located. Economies of scale are in your favor.
Your pay day is a lot bigger when you finally sell your property. An apartment complex costs more than a single-family home, and because of this, they obtain a greater dollar amount of appreciation. For example, in a market that appreciates 10%, a $100,000 single-family house will be worth $110,000 while a three-family house worth $300,000 in the same market (10% appreciation) will increase to $330,000. That’s $20,000 more money in your pocket in one transaction!
Because of the bigger cash flows, you can afford to hire management companies to manage the tenants, thus eliminating that hassle while you go out and look for more investment properties = apartment complexes to invest into.
There’s a lot less competition in buying multi-families than there are in single-family homes. Also, rehab or cosmetic /physical improvements and better management can have a greater impact on the value and cash flow of a multi-family than on a single-family house.
Work hard invest smart.
We focus on acquisition of high quality multifamily properties. These opportunities offer short-term value as well as moderate risk profits.
