Non Strata VS Strata
Investing in real estate can be a lucrative endeavor, but it is important to select the correct kind of property for maximum success. A non-strata multifamily property is a suitable investment selection that possesses numerous advantages compared to strata properties. In this article, we will look at why non-strata multifamily properties can be more beneficial than strata properties.
What is a Non-Strata Multifamily Property?
A non-strata multifamily property is a form of investment property that consists of many units or apartments, and each unit is owned by the same individual. Non-strata properties differ from strata properties, which are similar to condominiums, where each unit is owned by a different person, and common spaces are managed and owned by a strata council.
Why Non-Strata Multifamily Properties are More Profitable
1. More Management of Rental Income
Non-strata multifamily properties provide more control over rental income as the property owner has complete control over the rents and who they rent to. This allows the owner to maximize their rental income by setting competitive rates and selecting tenants that are reliable and have a higher likelihood of paying rent on time.
2. Lower Operating Expenses
In comparison to strata properties, non-strata multifamily properties have cheaper operating expenses. With a non-strata property, the owner takes on the responsibility of upkeep and repair costs, while in a strata property these would be split among the various owners, which could result in higher monthly fees that cut into the investment’s profitability.
3. More Accessible Lending
For the most part, it is more convenient to finance a non-strata multifamily property than a strata property. Non-strata properties are usually seen as commercial properties, allowing them to be funded with commercial loans that come with better terms and lower interest rates. Strata properties, on the other hand, are normally viewed as residential properties and thus strict lending requirements are imposed.
4. Lower Administrative Workload
Non-strata multifamily properties provide less of an administrative burden for property owners than strata properties. In a strata property, the owner must interact with the strata council, which can be time-consuming and demanding. Whereas, in a non-strata property, the owner has full authority over the property, with no strata council to deal with.
Challenges and Solutions
In spite of the positive aspects of non-strata multifamily properties, investors are still faced with particular challenges in order to make their investments profitable. One of the biggest difficulties is managing the property’s cash flow, ensuring that enough funds are available to take care of operating costs, mortgage payments, and other costs.
To address this difficulty, investors can apply revenue management techniques to enhance rental revenue and reduce vacant spaces. Revenue management involves setting rental costs according to market demand and the property’s special characteristics, such as location, facilities, and unit size. By utilizing data analytics and market trends, investors can adjust rental fees instantly, which can help to generate income and maximize gains.
To sum up, non-strata multifamily properties can be more lucrative than strata properties due to more control over rental income, lower operating expenses, simpler financing, and less administrative effort. While investing in non-strata properties has its own set of challenges, revenue management strategies can help to enhance rental revenue and make the investment more profitable. As with any form of investment, it is essential to conduct comprehensive research and due diligence prior to making an investment decision.