The Benefits of Owning a Multi-Family Property in San Diego
If you’ve come to this article, there’s a good chance you’re wondering why owning a multi-family property in San Diego is something most people consider a solid investment. If such an assumption is correct, you’re at the right address. That’s because today, we are going to show you the benefits of buying a multi-family property in one of California’s most beautiful cities.
What is a multi-family property?
Before we dig our hands deeper into today’s subject matter, we might as well consider some basic terminology first. To answer the question in the title: a multi-family property is a single building meant to provide separate living space to more than one family. You might say that a duplex (two dwellings inside one building) is probably the most rudimentary form of a multi-family property. The most common type of multi-family home is a small building with up to four individual units.
Of course, the owner has two options: to live there (together with tenants) or somewhere else and collect rent on all units. A person who doesn’t plan to live on the property is considered an investor.
What are the different types of multi-family properties?
Let’s do a little run through the various types of multi-family properties one might stumble upon in the contemporary real estate market. We can differentiate between:
- A duplex/triplex. As we’ve already said, this refers to two (or three) units that share a common wall, ceiling, or floor. Each unit or home should, of course, possess its own entrance. Also, each might have a separate yard or a garage.
- A condo (condominium). Usually, this refers to privately owned units found inside a community of other units. That means that an individual owner owns the interior of their unit together with the structural components of outside walls. Also, condo owners usually share common areas such as pools, garages, gyms, etc.
- A townhome. Here we’re talking about homes connected through a common wall. Usually, these have two or three stories and require less maintenance and upkeep than traditional (single-family) properties.
Okay, now that we’ve discussed the basics, let’s see why owning a multi-family property in San Diego might suit your style!
You won’t waste time growing a portfolio of rentals
If you wish to develop a somewhat extensive portfolio of rentals within a shorter time, buying a multi-family property is, without any doubt, something you need to consider. For instance, if you’ve got the funds, acquiring a 10-unit apartment in San Diego is a lot easier and more time-efficient than buying ten individual single-family properties throughout the city. Imagine all that hassle: 10 different sellers, ten different inspections, ten different loans (probably), and, after all, ten different addresses. Buying a multi-family property will turn that 10 into 1. Therefore, you should avoid the unfortunate scenario and build a relatively extensive portfolio of rental units by opting for a single multi-family property.
Did someone say “better cash flow”?
Here’s the thing: multi-family properties possess a more significant opportunity to accumulate some cash flow than traditional, single-family properties. Multiple units under one roof in a multi-family property generate lower expenses than a group of single-family homes that are disconnected from one another. Also, consider the following: multi-family properties usually have centralized and consistent management teams. For instance, they might find a reliable yet cheap storage provider instead of you; note experts at royalmovingco.com from experience. All in all: they’ll do everything that’s in their power to lower your expenses. Lastly, let’s just say that multi-family properties consistently force appreciation. This, of course, results in higher rents and profits.
It’s only the beginning
Many real estate investors can benefit significantly from buying their first multi-family property since many of their peers in the past have launched empires thanks to their starting purchases. They’ve made it because multi-family property investing is relatively easy to scale, as we’ve mentioned above. Opting for a multi-family property at the dawn of your “career” in real estate investing is, by all means, recommended.
What about taxes?
Another thing that makes investing in multi-family properties attractive is the very seductive tax benefits. That’s right, by opting for a multi-family property, you’ll be able to deduct maintenance and operation costs. We’re talking about utilities, property management costs, repair and upkeep expenses, insurance premiums, marketing costs, and many more. Also, keep in mind that, speaking of long-term advantages (as your building and appliances age), you can count on real estate depreciation and cost segregation tax benefits. Yup, you can count on those even if the fair market value of your multi-family building technically rises.
The assistance of experts
Before renting your property to tenants, you’ll probably have to fill the whole place with necessities such as common-space furniture or anything similar. However, you’re in great luck because cross-state movers from the area are top-notch. You’ll quickly find the right moving help, especially if you’re coming from LA or any place nearby since there’s tough competition in that area. That’s always to the benefit of customers.
An excellent way to earn a side income
San Diego real estate experts say, and who are we to distrust them, that investing in multi-family properties is one of the best ways to generate a side income in real estate (without moving a muscle). You can hire a property manager to take care of all the day-to-day responsibilities instead of you. If you don’t have little to no experience in the field or find such actions unappealing, that might be the best thing to do.
The diversity of product types
As one might assume, once we say “multi-family real estate,” it doesn’t mean we have one type of property in mind (you’ve seen the basics). This term describes various real estate opportunities one can take advantage of—several different product types. For instance, one can invest in small duplexes/triplexes, private, off-campus student housing, or many other things. What you’ll do with your property is also a thing to consider. Whether you’ll be more oriented toward traditional year-long leases or opt for something more short-term (such as listing your place on Airbnb) – it doesn’t matter. What matters is that multi-family properties in San Diego provide you with a solid number of opportunities you can choose from.