One of the commonly overlooked benefits of investing in multifamily housing involves the greater degree of control that landlords have over the price of rent. Typically, owners base rent on comparable properties in the area. With a single-family home, rent is thus often contingent on the prices that other people have set for the houses that they own. Potential tenants, likewise, will look at other homes in the area to judge whether or not a price is reasonable.
In multi-unit buildings, the most obvious comparables are the apartments located in the same structure, which gives landlords control over the hyperlocal market. This control affords them greater flexibility in setting rent. When making renovations to a multi-unit building, investors can typically increase rent more than with a single-family home because the price of comparables will also increase.
While multifamily property investors still need to ensure that they are not entirely pricing themselves out of the market when they raise rent, the greater control over rent can result in significantly greater revenue in the long term.
