After being involved in hundreds of real estate transactions focused on single-family homes, I looked at the best scale option. The initial thought centered around how many houses I would need to buy a year to reach my goals. As I learned about the opportunities in mobile home parks and apartment communities, I decided to focus my efforts on completing one or two deals a year instead of trying to close on 20 new rental properties.
Economies of scale come into play with multifamily, especially when it comes to improving property values by increasing its revenue. Since multifamily assets are valued on income, it’s quite common and easy to raise property value by filling vacancies, increasing rents, and billing back utilities. Therefore every $1 in capital improvement dollar spent can create $120 in return!