Buying multi-family properties in Kona is a great way to earn some money and establish some stability in your real estate investment portfolio. The right investment opportunity could show up as a duplex or a triplex, or a quad, or perhaps a small apartment building. The more units you own, the more rental income you can earn, and that’s better in managing risk and establishing financial security. We like multi-family properties because they provide higher cash flow and better ROI.
Renting out multi-family homes in Kona is different from renting out a single-family home. On our blog today, we’re taking a look at the benefits and the challenges that surround this type of investment.
Less Vacancy Risk is a Plus
When you are renting out one single home, vacancies can be financially difficult. Your vacant home isn’t earning you any rental income, and you still have to pay for things like utilities, landscaping, and pest treatments. You have to keep it clean and invest resources in its marketing. When you rent out a multi-family property, however, there is rent coming in from several tenant sources. So, even if you find yourself with a vacant unit, you’re in a much better financial position. You can absorb that loss of rent a bit easier when you still have other properties bringing in rental income.
This is the same benefit multi-family properties provide when it comes to evictions. No one wants to think about evicting a tenant, but if you have to do an eviction, it’s better to have other properties keeping you afloat while you’re trying to remove one renter who isn’t paying.
Maximizing Maintenance Savings
Maintenance costs are expensive and necessary, and it’s always advantageous to make your repairs and inspections as cost-effective as possible. This is far easier to do when you own a multi-family property. When you’re scheduling preventative services, you can have a lot more done at one time. HVAC inspections and water heater services will cost less when you have multiple units. You get one bill and a lot of items checked off your maintenance list. Landscaping, exterior maintenance, roofing, and other maintenance expenses are easily consolidated when you own multi-family property.
Tenant Relationships are Especially Important
You can expect to be more involved in handling your tenant relationships when you’re working with a multi-family property. You could be called upon to handle tenant disputes, especially if someone is playing loud music, parking in another resident’s space, or not cleaning up after pets. A strong lease agreement is critical and you’ll also need a good way of communicating with all your residents.
Determining Utility Payments
When you rent out a single-family home, it’s easy to expect your tenants to set up their own utility accounts and pay the monthly bills. When you own a multi-family investment, however, you may want to maintain control over electricity, water, and even cable. You can include the base cost in the monthly rent or you can charge the tenants based on usage. This doesn’t work for everyone, but it might be your best option depending on your tenants and your property.
Working with a professional property management company is always a good idea, especially when you’re renting out multi-family properties. You have a lot of liability with the extra tenants and there’s a lot of time that has to be spent on your building and your units.