5 Reasons to Invest in Multifamily Real Estate in Santa Barbara

Investing in small multifamily real estate is one of the best investment strategies for building lucrative and consistent cash flow on a monthly basis. That alone makes small multifamily real estate a smart investment, but this merely scratches the surface. In this article, I will outline just five of the MANY reasons to invest in small multifamily real estate – especially in the Santa Barbara market.

1. Small multifamily real estate creates more cash flow

Let’s address the first and most obvious reason to invest in small multifamily properties instead of single-family homes. From a business perspective, a multifamily property is a single asset, regardless of how many units the property contains (up to 4 units for residential real estate). With multifamily real estate such as a duplex, triplex, or fourplex, your ONE investment yields MULTIPLE streams of income. A duplex yields two streams of income, a triplex yields three streams of income, and a fourplex yields four streams of income. In contrast, a single-family home will only render singular cash flow. Simply stated, multifamily properties offer greater leverage than a single home.

2. Small multifamily investments are easier to manage

Every business requires management, and real estate properties are no different. However, with multifamily properties, you’ll benefit from economies of scale that reduce your management load per unit. Would you rather own three units spread all across California, or one single triplex in Santa Barbara? In the former case, you’ll potentially need three property managers, three gardeners… three of everything. Three drives on the 101 alone can make you lose it. Compare this with a single triplex in Santa Barbara that could easily be managed yourself or with one manager.

3. Small multifamily investments are easier to finance

At this point, you may be asking: If it’s all about more units under one roof, why not buy something larger than a fourplex? Here’s the thing – a property that contains five or more units is treated as a commercial property, which presents very different rules and regulations for financing. Any property with four units or less is considered “residential” real estate. As a residential property, buyers gain access to simpler financing options – even an FHA loan if you will be living in one of the units yourself. Many first-time investors with limited budget will buy a duplex, living in one of the units while renting the other out.

4. Small multifamily properties retain value

As Grant Cardone famously says, if you want to be rich, buy multifamily real estate. FYI, Grant Cardone owns over 4,000 apartments, so you can be sure he practices what he preaches. Aside from the passive income, Grant teaches that multifamily properties often retain their value better than single homes. The more income a property generates, the higher the value. Because multifamily properties contain more units, which means earning multiple streams of income, these types of investments are generally valued higher than single-family homes, which are dependent on comparable sales as rentals.

5. Scale your real estate portfolio faster

Multifamily real estate is ideal for property investors who wish to build a relatively large portfolio of rental units. Acquiring a fourplex is a lot easier and much more time efficient than purchasing four different single-family homes. As separate assets, you’d need to negotiate with four sellers, and conduct four (or more) inspections on four houses that are each located at a different address. Who has this kind of time? Why not ditch the headache and just buy a fourplex?


The vast majority of Americans intend on buying a home, so why not maximize your investment? As we’ve seen in this article, small multifamily properties (four units or less) present a distinct opportunity over single-family homes. From cash flow, to management, to financing, these unique assets pack a serious punch. If you are ready to see if real estate investing is right for you, please reach out anytime. I’d be happy to meet with you to outline an investment strategy to help you build your money machine.

Recent Articles

Home buying guide

7 Steps To Buying Your First Home In Santa Barbara

1. Get prequalified for a loan Before you begin the home buying process, it is essential to know how much you can pay for a home. Your lender can make this easy for you, by pre-qualifying you before you and your real estate agent begin looking for a home. A prequalification is free and can…


4 Questions to Ask When Selling Your Santa Barbara Home

There comes a time in every homeowner’s life when he or she realizes: “I am not the same person I was when I bought this place.” Maybe your lifestyle or your family configuration has changed, or maybe the house just isn’t as appealing as it was when you signed that ream of paperwork on closing…

real estate closing

10 Things Homebuyers Should Know About The Closing Process

If you’re reading this, you’re probably entering the home stretch. Hang in there! The closing process, or settlement, transfers ownership of your new home from the seller to you. Yes, there’s a lot going on, and a lot of money is going to change hands. But when you know what to expect and plan well,…

downsize home

4 Considerations When Helping Your Senior Parents Downsize

Watching your parents age is never an easy thing, and helping to make life decisions on their behalf can be immensely stressful. This is one of the reasons why children who are tasked with helping their parents downsize into a more lifestyle-appropriate home often delay in doing so. And when you combine this stress with…

Shot of young woman sitting at desk and making a phone call. Businesswoman working from home office and using cell phone.

The Millennial’s Guide to Buying a Home in Santa Barbara

Millennials who want to invest in real estate have it harder than many other generations. Real estate prices are at record or near-record highs in just about every major market in the country, and even though employment is good, wages still haven’t kept up with the home price increases, making it tougher than ever to…

host open house santa barbara

Host the Ultimate Open House When Selling Your Santa Barbara Home

An open house can be an ideal way to introduce a bulk of buyers to the property you’re hoping to sell them, and done right, an open house can sometimes generate multiple offers. The key, though, is “done right” — not every open house is going to be a buyer’s bonanza, and not every open…