When you start investing in real estate (and if you are not convinced that you should – read this introduction and a follow-up articles), the typical path for you as an individual investor usually starts with smaller-scale options: individual houses or condo apartments, pre-construction investment, etc. But, sooner or later, investing in multi-family homes will start looking more and more interesting.
Initially, this task seems very daunting – especially if you are an individual investor who does not have access to unlimited investor funds (like REITs do) – the prospect of you individually owning an apartment building is absolutely unimaginable. But multi-family homes don’t need to contain 200 apartments. Aside from “legal” definitions, assigned by federal corporations dealing with mortgage insurance or lending (CMHC in Canada, Federal Housing Administration, Fannie Mae or Freddie Mac in the US, etc.), for your purposes, a multi-unit building is pretty much any building that contains more than one unit. As simple as that. Technically speaking, it could be a duplex, a triplex, or it could be a building with 10-15 small apartments.
In theory, multi-unit buildings may be of commercial nature (such as office buildings), but for the purposes of this article we are going to discuss residential housing – in other words, apartment buildings that people live in. Due to their nature, I do consider those less risky than office buildings – but that is just my personal opinion and I do understand that sometimes you may want to take bigger risks with a prospect of bigger rewards with commercial buildings.