Investing in rental properties can be a fantastic opportunity. They offer a steady stream of income and excellent returns. Whereas the cost of buying residences has risen steadily in some areas of the country but fluctuated in others, the price of rentals has stayed in a relatively stable upward trend. Taking on this kind of venture may be a little daunting to investors who aren’t familiar with the dynamics of purchasing and managing housing. Nevertheless, serious investors should make it a point to learn about some of the basics of investing in multifamily housing.
Survey Your Market Carefully
In order to ascertain whether multifamily real estate is fairly priced and can provide the revenue that you’re looking to generate, it’s important to have a good understanding of the market in the area where you’re going to purchase. When you evaluate a property, you need to compare it with buildings that are incomparable condition. You should also get a sense of average rental prices based on surveys as well as actual rental listings.
Understand Your Overhead
It’s essential that you have a solid grasp on the expenses involved in purchasing and managing multifamily real estate. In addition to mortgage payments, you need to consider the property taxes for a specific parcel. You can probably find out prior years’ taxes online from your county assessor’s office. Also, you need to consider the condition of the property and what type of improvements may be necessary for the near future as well as a few years out. Lastly, if you won’t be managing the property and screening tenants yourself, you need to find out about the approximate cost of working with a management company. If you don’t live in close proximity to the area where a property is located or you’re not familiar with handling maintenance issues, working with a management company may be the best option. While you can’t expect that professional help will enable you to have a totally hands-off role, it can make taking on a property a lot more manageable for less experienced investors.
Identify Who You Want to Work With to Manage the Property
If you opt to work with a management company, you have to establish a relationship with a reputable company that offers the scope of services that you need. Look for a company that has a strong presence in your area and has affordable pricing. If you choose to manage the property yourself, you should identify good service companies to provide ongoing maintenance.
