Multi-family investment properties for sale are some of the most sought after in the US real estate market. The change in the market trend from owning to renting homes for many demographics makes this type of investment more profitable than ever before. Any multi-family investment properties for sale, however, must be researched and evaluated properly before you buy one. To help, Mashvisor provides you with the best tips for investing in multi-family properties below.
Start Small
If this is your first time buying multi-family homes for investment, it might be a good idea to start small. Smaller properties have only a few units such as a duplex or a triplex. Smaller multi-family investment properties are much easier to manage. This is a great way to learn the comings and goings of property management for future investments. Smaller multi-family investment properties for sale are usually cheaper as well, and therefore easier to finance.
Think About Location First
Given the high demand for single-family rentals, it is very important to find the best place to buy multi-family properties. The location of the multi-family investment properties for sale will make a big difference in the occupancy rate of these rental properties.
Look at areas where multi-family investment properties are in demand. A lot of times this will include areas near universities or suburbs close to cities. Also, think of the amenities near the multi-family investment properties for sale. These amenities include schools, shopping centers, and hospitals, and are important for families and elderly tenants. Don’t forget to also make sure that the area is safe when buying an income property.
Consider Resale Value
When learning how to invest in multi-family homes, remember that it is important to think about the resale value of the property. Even if you will use the investment property initially as a long-term rental, you will likely sell it in the future. This is important to think about while still looking at multi-family investment properties for sale because these types of properties can sometimes appreciate in value much more slowly than others.
Understand the Market You Are Investing In
Today’s US real estate market looks a lot different than it did fifty years ago. However, some basic principles still exist. For example, the principle that says single family investment properties usually appreciate in value and are higher in demand than other properties is almost always true. It is also true, however, that multi-family units are increasing in demand due to the shift away from buying properties to renting them. Read up on real estate forecasts for the future to make the best investment before you buy multi-family investment properties for sale.
Figure Out Your Finances
Financing rental properties can be a little difficult at times. However, this is definitely not the case when you are looking to finance multi-family investment properties for sale. Banks are a lot more willing to approve loans for multi-family units rather than single-family dwellings.
Before you start looking for a bank loan, however, make sure your finances are in order. Financing rental properties of any kind requires you to know exactly how much you are currently making and spending.
On top of that, you also need to use a multi-family investment calculator when looking at multi-family investment properties for sale. This tool will use comparative market analysis to give you estimates about expenses and potential income from different properties. It will also help you to determine how your choice of financing will affect your ROI.
Sign Up to Mashvisor to start using a multi-family investment calculator now.
Find a Partner
Buying an investment property, especially a multi-family property, is a lot of work. Multi-family units, even smaller ones, require a little more property management than single units. Having an investment partner will help when buying an investment property, as well as managing the units. Having more financial help will allow you to look for pricier, yet better investments.
Related: What You Need to Know About Real Estate Partnerships
Maximize Use of the Property
The best real estate investment is one that you can use in multiple ways. Think outside of the box when trying to maximize the use of your investment property. For example, rent out rooms in each unit rather than renting out the whole unit to one person or family. Renting out rooms will bring in a higher rental income and allows you to charge for amenities such as laundry and other services.
Evaluate the Property Before You Buy
Before buying, you must know how to evaluate a multi-family investment property. This takes on many different facets.
First, there is the physical inspection of the property. This should be done with a licensed and experienced inspector. The physical inspection will let you know if there are any major repairs that need to be done.
The other type of evaluation involves multi-family real estate investment analysis. Use a multi-family investment calculator to evaluate the financial strength of this investment and how the expenses and your financing will affect the ROI.
Related: Learn How to Evaluate Multi-Family Investment Properties
When looking at multi family homes for sale, remember to do the proper research and evaluation. Multi-family rentals are becoming more and more popular, giving you more potential tenants. Look for the right area to invest in even if it is not local to make sure you get the best return on your investment. Use the necessary real estate market analysis tools to find all the margins you need. These statistics will help you determine if the property of interest is a good investment.
Ready to start investing in multi-family homes? Start your search here.