Investing in multifamily real estate has gained plenty of popularity over the past decade. It’s common knowledge in the commercial real estate field that this is a growing market which shows no obvious signs that it will slow down at any time soon. There are a lot of great reasons to invest in multifamily, from greater cash flow to high returns on the initial investment, but there are also some other considerations you will want to take to make sure that you find the right investment opportunity for you.
Consider the Location
Multifamily real estate relies just as heavily on a prime location as any other type of real estate. Communities located within close proximity to major roadways, public transportation, popular nightlife and dining, outdoor recreation, and others are much more likely to stay occupied and retain tenants.
Overestimate Your Expenses
Owning a multifamily property can get expensive (with so many different units to attend to) so it’s important to make sure that you have enough money set aside to handle any unexpected expenses that could arise. Regular property maintenance, renovations and repairs will be necessary to keep your property competitive.
Think About a Turnkey Property
One way to avoid some of the upkeep is to purchase a property that has already had major renovations done. This ensures that all of your units are move-in ready at the time you sign the closing papers (meaning that you can start making money on them right away).
Consider the Amenities
Multifamily real estate that offers a lot of extra amenities can be a great selling point to potential tenants, but it also means additional upkeep for you, the property owner. Make sure that you have the resources to properly maintain these as well.
Rather than diving in and purchasing a multifamily property with 300 units, consider starting small. Multifamily real estate can consist of as little as 2 units (called a duplex) which require far less upkeep than larger communities.
Have a Proper Inspection
An easy way to avoid potential headaches after the purchase is complete is to make sure that you have a proper inspection done by a reputable inspector. If the previous owner hasn’t been properly taking care of the property, this could mean another hefty price tag for you down the line.
Have a Property Management Plan in Place
One of the most time-consuming parts of owning multifamily property is keeping up with the everyday tasks, such as, collecting rents, scheduling maintenance, and handling tenant issues and complaints. It’s a smart idea to have a property management team already lined up who can handle some (if not all) of these scenarios for you.
Verify the Property’s Cash Flow
No investment is a good idea if you are going to lose money on it! That’s why it is of the utmost importance to know the current income on a property before you buy it. If the income doesn’t outweigh the expenses, it’s time to keep looking for a different multifamily property.
Understand Your Local Market
Not all multifamily markets are the same. Depending on where you are, the average rents and vacancy rates will fluctuate. A good way to determine both of these is to watch your market for a few months to see what other comparable units are going for in similar areas and how long listings are staying on the market.
Work with a Qualified Realtor
The best way to avoid making any mistakes when it comes to your first multifamily real estate investment is to work with a skilled and qualified realtor who specializes in multifamily property in your area. Not only will they be able to guide you through the process from start to finish, but they will also have access to inside information that will help you to find the best properties for the best prices. A good realtor will also help to negotiate the best lease terms for you and protect your interests along the way.
Looking for a Multifamily Real Estate Investment Property in Hattiesburg or the Surrounding Areas?
If you’re ready to take the plunge into multifamily investing, you’ll want to work with the best! At SVN | Southgate Realty, LLC, our team of dedicated Advisors has been helping investors, both new and seasoned, for over 37 years to find the perfect investment properties that suit their personal needs. Our pros are committed to giving you a positive experience, and their knowledge of the local market is unmatched. Give us a call today to learn more or, take a look through our database of currently available properties!