As the single-family housing market slows under the weight of rising mortgage rates, multi-family construction remains a bright spot for the commercial builder. According to the National Association of Home Builders, the number of apartments and condos under construction is now at the highest level since 1986. The primary driver behind this surge? High demand and rising rents around the country.
Multi-family homes play a key role in the real estate market, impacting people of all income levels and stages of life. Millennials – including those in their late twenties and thirties, with an estimated population of more than 72 million – establish an independent household with their first apartment. Middle-aged workers experiencing a career change can transition more easily by renting their housing. Baby boomers – who, with a population of 69 million people in 2022, place a close second to millennials as the largest living generation – often use rental housing to enable a safe, low-maintenance, more cost-efficient lifestyle.
Building multi-family rental units can be a great start for an investment portfolio in southeast Wyoming. Take a look at these benefits if you want to hire a commercial builder to construct multi-family properties as a real estate investment.
5 Reasons Multi-Family Construction Is a Worthwhile Investment
Increased Cash Flow
One of the most attractive benefits of multi-family investment is the consistent cash flow generated by multiple rental units. While a single-family rental property has only one tenant, multi-family properties house multiple families or individuals paying rent. When a vacancy occurs in one unit, you will still have income from the other units to cover expenses. However, prior to investing in a multi-family building, it’s important to determine whether the rental income in your market will surpass total operating expenses, including mortgage payments, taxes, insurance, maintenance and property management fees.
In a strong market like Cheyenne, investing in real estate provides an effective strategy to earn passive income. If you build a multi-family home and hire a property management company to oversee its operation, you will have few day-to-day responsibilities, giving you more time to focus on your day job or your next investment. Property managers will handle tasks such as collecting rent from tenants, handling maintenance requests and turning over units.
Because foreclosures on apartment buildings and other types of multi-family properties are less common than foreclosures on single-family homes, mortgage lenders assume less risk when making loans. This means they can offer investors lower mortgage interest rates. It makes constructing a multi-family property with a commercial builder relatively risk-free for an investor.
Tax law allows you to deduct expenses necessary to maintain and manage a multi-family property from your taxable rental income. Eligible expenses include mortgage interest, insurance premiums, utilities, maintenance, repairs and property management fees. You can also depreciate the building and its appliances over time, further reducing tax burden.
Managing a four-unit multi-family home is easier and more efficient than handling four separate rental units spread all over town. Because a multi-family home will typically generate enough income to allow you to hire a property manager to handle the day-to-day operations, it can be an ideal match for investors who do not want close involvement with their rental property.
Any real estate investment carries its own set of benefits and risks. If you are serious about investing in a multi-family property, work with a commercial real estate professional to evaluate the Cheyenne market and the best strategy to meet your real estate investment goals. When you are ready to begin a project, Gateway Construction, LLC would be proud to serve as your commercial builder of choice. Contact our experts for more information by calling (307) 632-8950 or contact us online. Let’s start building your future today!