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MULTI-UNITS

SPECIAL GUEST ARTICLE By Wright Thurston
SHORTCUT TO FINANCIAL FREEDOM WITH MULTI UNITS

A recent landlord survey indicated that visitors to this site are evenly divided on whether they would prefer owning single family rentals instead of multi-unit buildings. The author of this guest article makes an argument for why he favors multi-units and small apartment buildings.

Let's look at some of the reasons why multiple units are a shortcut to financial freedom. If one house is a good investment, would not two, four, six or eight houses be even better?

Now think of these four or six houses as being a four-plex or a six-plex. Here are seven different reasons why multiple units are a shortcut to your financial freedom.

1) Less Cost Per Unit

The first house I purchased cost $63,000. The first income-producing property I bought, a duplex, cost $105,000. Notice the difference in the actual cost per unit. You need to take the cost per unit into consideration.

If you're in a single family house and it has a $63,000 mortgage at 12%, your payments are about $650 a month. Since it's just your family living there, just one wage earning family will be making the payments.

In the case of the duplex, even though the cost was significantly more than my house, the actual cost per unit was $10,000 less, or about $52,000 per unit. There were also two families living in the duplex and two families paying rent. Since my per unit mortgage amount was less, the chances of collecting enough rent to cover the mortgage and expenses was increased. This is an important factor to consider as you search for your properties.

2) Improved Vacancy Factor

If you have a single family home and it's vacant, it's 100 percent vacant. You have no one to pay the bills and it becomes a negative cash flow. If you have a four-plex and one of the units is vacant, now you're looking at a 25 percent vacancy factor. And if you should have a 20-plex or something larger, then your vacancy factor would be only five percent or less. The more units you have, the less impact the vacancy factor will have on your cash flow.

3) Better Financing

It is often difficult to obtain financing for buildings larger than four units. If you're a seller, this might seem discouraging. But as a buyer, it provides a golden opportunity.

It allows you to negotiate much better financing and much better terms. If the sellers could get financing on their units, they would probably refinance it themselves and pull out some cash. Often, they may not be able to get the funds they need on a timely basis. Therefore, they may offer you terms as a buyer that normally may not be available.

They will probably have to take their equity and carry it in either a second or third mortgage position. They will be more likely to let you pay back their equity over a longer period of time. Even though they might want a balloon payment in 10 years, you can usually make the payments as if you were paying it off over a 30-year period. This will make your monthly payments lower. You'll also be able to ask for a lower interest rate on the seller's equity. So the terms and financing on multi-units can be more advantageous.

4) Simplified Management

When I used to own a single family house, a duplex and a triplex, I was running all over the place. I had to do every-thing myself and it was very time consuming. When I started buying six and 12 unit apartment buildings, the tenants were all located together. I was able to hire other people to help out. They were the ones plunging the toilets.

I found that if I had 10 units or more, I could hire a full-time person. What a joy it was to have them take care of most of the responsibilities. Of course, I still had to manage the managers. I had to pay attention to details and make sure everything was running properly. But because other people were assisting me, I had more free time to look for new investments.

5) Less Expense

You will have less expense per unit. Your costs are reduced and they are smaller. When I had several single family homes and had a maintenance problem, the plumber or electrician or whoever charged quite a bit per hour. In fact, they charged a fee just to look at the problem. Many times, even though they might have been there for only 10 or 15 minutes, I got billed a tremendous amount of money.

When your units are all in one place, you are aware of both the minor and major problems. So when the electrician or plumber stops by, he can work on all the problems at the same time. Your costs are then greatly reduced.

You'll also have more "staying power" with multiple units because the rent monies you have collected will allow you to have a reserve fund for emergencies. With just one tenant, a $500 emergency repair might wipe you out. With multiple units, it is much easier to absorb those unexpected costs.

6) More Positive Cash Flow

The cash flow is substantially greater. If your cost per unit is less, and your vacancy factor is less, and you've been able to get better terms, lower interest rates, longer payment periods, and your management saves you time and expenses, then of course there's going to be more money left over.

After the first few months of operation, your monthly rents should take care of your debts and expenses. You'll have more positive cash flow and you'll be able to use it any way you want.

7) More Time To Do What You Really Want To Do

Multiple units will give you more time to do what you really want to do. Because time you spend in management is less and positive cash flow is a lot more, you'll reach the point where you can say good bye to your current job. If you want, you can become a full-time real estate investor. Regardless of your occupation, as you get more and more units, you will have the kind of financial freedom you're searching for.

Agree or Disagree? Single Family Rentals or Multi-Units, Which is better? Send comments to editor@mrlandlord.com. We may share your comments on this website.

Wright Thurston has a complete course on buying multi-units that I recommend to anyone considering buying multi-units and small apt buildings. His course is titled: "Diamonds In The Rough" (Making Money with Multi-Units)

BEST BUY OF THE WEEK

(exclusive offer to the Rental Owner Newsletter Club and mrlandlord.com website visitors)

DIAMONDS IN THE ROUGH
How To Buy Multi-Units and Small Apartment Buildings with little money and build financial independence faster with multiple units.

I've made special arrangements with my friend Wright Thurston, who is one of the leading national instructors on buying multi-units and small apartments. For a limited time, my website visitors and subscribers can order his course Diamonds In The Rough: How To Build A $9,000 A Month Positive Cash Flow, which teaches you in step-by-step detail how to build financial independence through multiple units.

His course includes six (6) information-packed audio tapes and the 7 Step Checklist For Successful Real Estate Investing. This course teaches you everything you need to know to start building your monthly cash flow NOW. Here's just some of the information you will receive....

* 14 Ways to Locate Bargain Properties
* 13 Ways to Identify Motivated Sellers
* A Complete Checklist of the 49 Questions You Must Always Ask the Seller
* How to Analyze the Income Potential of the Property
* Checklist of the 23 Things You Must Do Before You Purchase the Property
* Successful Negotiating Strategies
* Where to Get the Money: 27 Sources
* Management Guidelines and Techniques
* 25 Ways to Successfully Generate More Cash Flow
And much, much more.

The Regular price is $249.95. However for a limited time, Wright has given me exclusive permission to offer his courses for just $99.95. The response has been overwhelming. So much so that Wright agreed to send me another shipment of his courses, however I must ask for patience of those ordering his course as we await shipments. We will send them out to you just as soon as we receive them. However, Wright warns me that he will soon raise the discounted price I can offer. So if you want one for the special $99.95 price, call now, 1-800-950-2250 to order his course, DIAMONDS IN THE ROUGH. Or click here now to order online.

 


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