It’s a good time to consider investing in multifamily real estate properties for your next venture. Consistent income, an efficient financing method, and plenty of opportunity for growth – sounds like the perfect option for an investor.
But we all know that there are two sides to the coin when it comes to real estate investment. Multifamily properties are complex and tend to need more attention than standard commercial property rental. If you’re thinking about going down the path of multifamily property investment, these are some things to remember.
Buy or Build?
If you’re an investor, it’s your job to preserve the safety and physical integrity of the homes you rent out. If you opt to build your property from the ground up, rather than buying an existing building, you should have a better grasp on how durable the materials holding up your building are. This could be an advantage, as you can be sure to go with dependable contractors and quality materials.
On the other hand, an investor who purchases an existing structure can start profiting quicker. Additionally, investors who shop the market of pre-built multi-unit homes can examine properties prior to investing in them and elude losing money on what might be a bust.
Whenever you choose to build a new property, there’s always the chance that something unexpected occurs that might delay your completion date, which then postpones the day you can start making money. No matter if you choose to build or buy, you should use dependable property management software to streamline daily processes and lower margin for error.
Lower Risk, More Flexibility
One thing the financial crisis of 2008 certainly taught us is that we can never say with total confidence what to anticipate the market will do. But it’s worth mentioning that multifamily housing units have proven surprisingly robust resilient in economic slumps. Why? Because everyone needs a place to live. This is why there will almost always be an advantage over investing in other real estate such as typical commercial properties.
Lots of Options
The term multifamily units is a very wide-ranging group of housing that it is hard to simply lump into one blog post. Multifamily units can include anything from student housing to triplexes to various types of apartment buildings.
Be sure to think about who your ideal occupant might be and what sort of relationship you are ready to have. Every option has its ups and downs. The major con of going the student-housing route is that there is consistent turnover. It’s true you can trust that incoming students will rent out the room, but you will also have to process new occupants every year or so.
Multifamily Means Pricey Entry
Even though the risk is generally low, the obstacles to accessing the world of multifamily units can be very high. Additionally, there are a large number of competitors you will have to battle in the rental market. They will also want to take advantage of the many advantages that accompany multifamily unit rentals. In most multifamily areas, it is an exceedingly competitive market.
If you want to permeate this investment market, be prepared for rigid, seasoned, and well-prepared opponents. In order to compete, be sure you can rise to the occasion and be just as prepared. If you’re a first time investor in a multi-family unit, do your research and sharpen your skills. It would certainly behoove you to take additional courses on real estate investment or reach out to professionals.