When you purchase property as an investment, you need to have a very clear idea of what you plan to do with that real estate. If you invest a significant amount without first developing a return strategy, there’s a good chance you could lose money in the end. For those who are considering making a real estate investment and wondering what might be the best option, here are six reasons why multifamily rentals are a savvy way for you to spend your money.

1. Consistently Increase Value

It’s hard to force appreciation with certain properties because there’s a limit to the number of things that can be improved. With an apartment building, you’ll have far more renovation possibilities than you would if you were renting out a single-family home. Multiple kitchens mean multiple sinks and appliances that can be upgraded, and the same goes for all the other rooms that you might be able to improve.

2. Higher Earning Potential

While a tenant will pay more to rent a house than he or she will to stay in a one or two bedroom apartment, having multiple renters living under one roof usually increases the monthly profits of the property manager.

3. Simplified Management

Owning several properties can increase your revenue, but it also requires a lot of work. Multifamily rentals allow property owners to bring in cash from multiple sources while only managing one location. While you might still have to answer to several tenants, it makes a huge different when you’re only fixing one septic tank at a time.

4. Tax Incentives

Cities love properties that are designed to house multiple renters because it takes care of a number of residents without calling for increased land development. Owning a multifamily unit will open you up to several tax breaks that other real estate investors don’t get.

5. Help People

If you can make money while helping out your fellow residents, why wouldn’t you? The rental market can be extremely competitive, so providing quality units to the people in your city is a commendable service.

6. Attractive to Future Buyers

When you fix a rental up so that it can house more than one family, that building becomes an appealing asset to other investors. If you ever decide to sell, buyers will be lining up out the door.

Of all the ways a person can make money off of real estate, multifamily rentals are one of the best. Make sure to consider this option if you’re looking to invest.