Investing in a multi-family property can be a smart move if you want to build a portfolio quickly. There are numerous benefits associated with multi-family properties, but what you really need to learn is how you can go about making an investment of your own. Provided below are a number of tips from pros that have already built excellent portfolios by investing in multi-family real estate. You can apply these tips to become successful in your own right and make the whole investment process a great deal easier than it would have been otherwise.
#1 Focus on Location
If you want to be able to invest successfully, you need to learn how to scout a location. This is for purely practical reasons. If your multi-family property is in a good location not only is that value of the property going to go up but complexes in good locales end up getting rented out a lot more quickly than properties that are in adequate but somewhat less stellar locations. Make sure that the area of your multi-family property is family friendly, and that it is as close to the necessary amenities as possible. This means places like schools and hospitals, as well as stores. Try to find a complex that is far from the city center though because such places tend to be somewhat less family friendly.
#2 Plan For Unexpected Expenses
Buying a multi-family property involves a lot of unforeseen expenses. The key to making sure that you never fall financially short of being able to pay for said expenses is to overestimate your budget. You can start off by calculating all of the costs and then adding a solid percent of that amount on top of that. This will definitely make it a little more difficult for you to be able to afford the investment in the first place, but doing things right the first time will allow you to prevent mistakes from messing things up in the future.
#3 Have a Set Goal in Mind
A multi family property can be useful for a wide variety of reasons. You need to figure out what your actual goal is. Do you want a property that would appreciate over time in its overall value? Or do you want a consistent rate of return that would provide you with some level of income that you would be able to live off of? Both goals will require both different levels of planning and different kinds of execution as well, so try to keep this in mind.
#4 Work With People Who Have Done This Before
If you want to invest in a multi family property, you are going to have to look into building a team of professionals to help you do so. A common mistake that people make is that they end up hiring pretty much anyone who works in the field of real estate. What they should really be doing is hiring someone who has specifically worked with multi family properties before.
#5 Start Small
Another common mistake that a lot of people make when it comes to family planning is that they end up trying to bite of way more than they can chew. Not all multi family units are apartment complexes. If you are new to this field you can start off with a duplex, or maybe even a triplex if you want a bit of a challenge. This will help you get your portfolio started and moving in the right direction without putting too much pressure on you to succeed. Too much pressure can make it difficult for you to excel in a field.
#6 Try to Be Logical And Objective
A lot of the time, people that are thinking of investing in real estate are going to be tempted to make a decision out of an emotional train of thought. They might end up buying a property because of a feeling it gives them. It is natural to be excited about your first purchase, but you are putting real money on the line so it is very important that you look into the pros and cons of the purchase that you are about to make so that you don’t end up regretting your decision later on.
#7 Focus on Renovation
Once you have purchased a property, renting it out to people should be your biggest priority. Renovating the place a little will make it more likely that people are going to want to live in your multi family property. This is because of the fact that it will give the place an air of being cared for, and it will give the impression of newness. People are more likely to rent a property if they think it’s new.
#8 Make Sure Maintenance Has Been Done Before Purchase
This is one of the rational thoughts that should go through your head before you buy a property. Even if the property looks spick and span, you need to ensure that all of the necessary recent maintenance has been done. Failing to do so could result in unexpected future costs, so if maintenance has not been done then this could give you the chance to lower the asking price at least to some extent. That being said, it will always be a better idea for you to get a property that has already been maintained.
#9 Opt For a Direct Lender
Borrowing from a direct lender can end up saving you a lot of money. This is because of the fact that you are not going to have to pay the various fees and commissions that would have otherwise been the case if you had opted to get a loan through a middleman. Although the process can end up being tedious and drawn out without a middleman, the money that you are going to save will definitely end up making it worth it because you can just invest this money back into your property.