A Complete Guide To Multi-Family Building Investments

Multi-family building developments are one of the buzzwords and city-changers in today’s housing market. Investing in multifamily properties is an appealing prospect for many investors. As a result of its relative simplicity, multifamily investing is often considered a “no-brainer” investment strategy.

However, there are several pitfalls associated with multifamily investing that investors should be aware of before jumping into the fray. This article covers 6 aspects that you must know before investing in a multi-family real estate property.

What Is A Multi-Family Building?

Multifamily housing consists of multiple homes within a single structure. These structures may contain anywhere from 2 to 10 or more individual homes. Multifamily housing is usually found in urban areas, although there are many examples of multifamily housing in suburban and rural settings.

You can define multi-family housing as any type of residential property that consists of multiple units, including apartments, townhouses, duplexes, triplexes, fourplexes, etc. In some cases, these multi-unit homes may even have commercial uses.

How To Evaluate Multifamily Properties? What To Consider?

Location

When looking for investment opportunities, you need to consider the location. Where is the building? How will it fit in your portfolio? Will it be situated in an area with growth potential? You also need to think about whether the demand for apartments is increasing or decreasing. If there is a lot of demand, then the price of apartments might rise quickly.

Amenities

Amenities are things that make a property desirable. These could include schools, shopping centers, restaurants, parks, etc. A good example would be a property located near a school, grocery store, and park. Services are things that provide value to a property. Examples of these would be utilities (electricity, water), parking, security, maintenance, etc.

Number Of Units

How many rental units can be rented to different tenants? When considering new investment opportunities, evaluate how many rental units or rooms can be used. You need to think about what kind of occupancy rate your property will achieve. A high occupancy rate means that you will have more revenue per unit. However, if the occupancy rate is low, then each unit may not generate enough income to cover its expenses.

Parking

Parking is something that people often overlook when looking at multifamily properties. However, parking is a major factor when determining the desirability of a property. People want to live close to where they work, but they also want to be able to drive to where they go.

Seller

In real estate, there are many different types of sellers. Some sell their property through a bank or other institution. Others sell directly to buyers. There are also private sellers, who may sell their property or another owner’s property. Determine which kind of seller you’re buying your property from.

Price

Before investing in multi-level real estate, check out its current market value. You may need to pay a broker’s fee to get the deal. If you plan to rent the property, you will also need to factor in the cost of utilities, taxes, and insurance. These expenses should be factored into your budget before purchasing the property.