There are many ways to get started in real estate investing. For the beginner, a good strategy might be to buy a multi-family rental unit. Four families or less per building is the ideal size to look for. This will allow you to acquire a building with a residential mortgage, taking advantage of the lowest interest rates. Here are some good reasons why investing in a multi-family building may be less risky than other types of housing.

First is the competition. There will be more investors looking for those single-family homes. This can increase the price of those houses to a point where they will not generate cash flow for you. Don’t depend on appreciation to create cash flow. You need your properties to be cash flow positive from the start. If you are considering homeownership, you could also purchase a unit that has more than one tenant option.

Then there’s the fact that you have more than one unit for rent. If you buy a single-family home and the tenant moves out of town, you must cover the full mortgage payment until you rent it again. With a multiple family, it would be highly unlikely that all of your units would be unoccupied at once, giving you a bit of protection. If you have a four-unit building, having a tenant move out may not even give you negative cash flow. This could make all the difference in the world to your annual earnings.

Multi-family units give you more money per month. Depending on your market, duplex or triplex properties may be about the same price as a single-family home. However, you can get more rent from 2 units than from a single unit. So you’ll get more money each month for roughly the same mortgage payment. Which means more positive cash flow – the most important aspect of real estate investing!

Repair costs per unit average to be less. If you have 3 single-family homes and need to replace the roof on each one, that’s a lot of money per unit. However, if you have a triplex that needs a new roof, you are actually replacing 3 roofs in one, which lowers your cost per unit. The same goes for maintenance, it’s less travel time to get from one unit to another, which maximizes labor costs.

As your real estate portfolio grows, the increased cash flow your multi-family units give you will allow you to afford a property management company if you want to. This will free up your time to find other offers or do whatever you want!

So don’t get stuck in the mindset that real estate investing only involves single-family homes. Smart investors will have a portfolio that includes a mix of single-family and multi-family properties. Just work with the numbers and multi-family investing just might pay off for you!