HOW TO BUY MULTI FAMILY UNITS

On your road to financial wealth in real estate buying, a multifamily property can be an income producer. Small multifamily units have a great intrinsic value; they can support debt from the income they generate.

Profitability is crucial when looking into this types of properties. A successful investment depends on the potential income a property can make to cover or surpass its debt and upkeep.

Let’s go over the main factors that influence a multi-family property profitability.

FINANCING

Setting up for a financially successful venture in real estate requires a good team. One of the key players will always be your investment partners. When working with “other people’s money,” a lender that will work towards with you to get the best terms is a key factor.

Buying a multifamily home requires a detailed investment plan. Running the NOI and the rate for a loan, property valuation and what the local market bears, can give you the edge needed to pull the trigger.

Be as specific as you can with the numbers and investment analysis. Lenders like to see all the details to move forward quickly.

MARKET

It is crucial to understand the local market trends. A large influx of renters in an area or rents jumps are good indicators that you will be able to get the right tenants. Using Rentlit background check can help you make a quick decision.

Check vacancy rates history in the area; the real estate market tends to follow a trend that helps you pinpoint when to buy.

ECONOMIC CONVERSION

Be very specific on what you are targeting as an ideal property. Wealthy investors often buy multi family homes for the sole purpose of tax deductions; this translates into a hard competition when placing an offer.

Put together a list of specific characteristics of your ideal property. This simple list helps clarify your goals and the nonnegotiable you are linking for in the investment. Keeping in mind the price vs. long-term investment, think about: year build; property upkeep; roof type and age and any other factors that will help you pick a solid investment.

A boiled down checklist for realtors will save you time by efficiently looking at the right properties as they become available.

Once you pick a property, do a walk around looking for possible ways to improve it and analyze the risk factors. Upgrades to the building will allow you to raise rent and improve tenant retention.

Buying a multifamily property has many advantages, the most obvious one being the power to grow your wealth in the long term. On the other hand, there are some concerns about managing the asset, finding the right tenants and collecting rent. Here is where Rentlit becomes a key player in your team by automating tasks like collecting rent and screening new tenants.