Multifamily Rentals: 5 Things to Look for Before Investing
Investing in multifamily rentals can be a great opportunity. Instead of only getting rent from one entity, you have numerous families paying you rent every month. While they can be costly to invest in upfront, there is a great potential to reap a nice profit in the long run. However, there are things to look for in a property before even making an offer. Go about your real estate search wisely, so you end up with something that will benefit you for years to come.
First, you want to make sure a property is located in a great town. Not only that, but you want to make sure it is located in a great part of that town. You should look at the various amenities in the vicinity such as schools, restaurants and businesses. Additionally, you want to see if it is in the suburbs or in the heart of downtown. That will let you know the type of people you can expect to get.
2. Number of Units
Some multifamily rentals only come with a few units while others come with dozens. You can reasonably expect that a property with more units will be more expensive. However, more units mean you can rent out to more people and bring in more money every month. Some property managers will prefer fewer units because they will be easier to manage. It is ultimately up to you.
3. Rent You Can Get
Do research in the city to see what other rental properties are asking for rent. You will want something comparable. Naturally, if there are amenities you can offer other rentals cannot, then you may be able to ask for more. You need to calculate the rent you can bring in with the other associated costs, so you have an idea when you will see a profit.
4. Additional Expenses
Part of those calculations involves determining what else you need to spend rent on. You should factor in for repairs that will need to be made every so often. Additionally, you need to save some for the property taxes.
5. Financing Options
Before searching, you should have an idea what types of loans you qualify for. By getting financing first, you have a better idea of what you can make as a down payment.
You will have a greater chance of success with your investment if you take your time considering all your options before making offers. Multifamily rentals can be a great opportunity for the right investor.