Investing in commercial properties can be a great way to create a steady revenue stream. Commercial properties typically offer a higher financial reward than residential properties, like single-family dwellings, but they also come with higher financial risk. However, it can be easier to get flexible financing for commercial real estate and the maintenance requirements are often less involved than residential. There are four main types of commercial properties for investors: multifamily, industrial, retail, and offices. Here are a few of the pros and cons of investing specifically in a multifamily property residence like apartment complexes, townhouses, or condos.

PROS

Increased Cash Flow

More units available to rent also means increased cash flow. A multifamily residence will provide a much steadier return on investment than investing in a single-family property with more money coming in from each unit. Additionally, with a multifamily residence, there is no waiting period between when you purchase your property and when you see a return, unlike some other commercial real estate investments that only provide profit in the long term.

Less Risk

With a multifamily residence, there is much less risk involved than in some commercial and residential investments. Even if one renter leaves a unit, you aren't out of money until another tenant moves in. Rather, you will still have the income stream from all the other units in the building coming in while you find another tenant. This factor is especially beneficial over investments in single-family residences where your income is reduced to zero or even into the red between the time your tenant moves out and a new tenant moves in.

CONS

Increased Management Responsibilities

One factor that keeps potential commercial investors out of multifamily residences is the increase in management responsibilities that come with owning several units. That might include physical maintenance of the units as well as the administrative maintenance of dealing with people moving in and out, paying rent or not paying rent, and finding new tenants. However, you can minimize this responsibility by hiring a property management company to do all of that for you.

More Expensive Initially

Probably the factor that keeps the most real estate investors out of investing in multifamily residences is the dramatically increased upfront costs. The national average for constructing a multifamily residence is between $64,000 and $86,000 per unit. Many investors don't want to take the financial risk that buying or building a multifamily residence requires. It can also be difficult to compete with the many other experienced and savvy investors when it comes to negotiating price.

For more information, contact a company like Halifax Commercial Properties today.