Tips to Analyze Multifamily Investments


Investing in multi-family properties has been one of the most popular forms of real estate investing from the time real estate investing started and from the time people built multiple separate homes in the same building. Is it a trend that’s gone old? No. Not at all. It is as profitable as it was years ago and is as feasible as an investment as any other forms of investing in properties.

In fact, multi-family investments are one of the best real estate investment opportunities there is, and we cannot agree more. It is best suited for Realtors who are interested in drawing regular substantial cash inflows from their properties that are stable even if it’s uniform. Are you looking for investing in multi-family properties? This blog has all you need to know in order for you to analyze your multi-family properties is you can make the right pick and make the best out of your real estate investments. Hang in tight there.

What are multi-family properties?

To cover the basics first here is s small brief on what are multi-family properties. Multi-family properties are buildings with multiple living units. They are built for multiple families to live in separate living units, all in one big building and they’re especially popular in the localities that have high rental demand. You’re more likely to find such properties in the hustling bustling urban parts of the states, over the suburban ones.

Why do real estate investors love multi-family properties?

Most Realtors love investing in multi-family properties because of the multiple sources of income these properties bring in. The other favorite advantage would be the time required to reap returns from investing in multi-family properties. It takes very less time, depending on how soon you’ll be able to find the right tenants for your properties but as a rule of average, they sell like hotcakes, especially if the location is bang on, and you’ll see some real benefits or returns from investing in multi-family properties in a very less time window.

The one downside to investing in multi-family properties

One major downside to investing in multi-family properties is the enormous prices of these properties. They are any day more expensive than single-family units. But if you’re a serious investor and can pool in the kind of money needed for investing in multi-family properties, then, there’s nothing more profitable than spending your hard earned cash in multi-family properties and reaping the benefits of returns for years to come.

However, you can always dodge this drawback if you are sure about the returns you can make from your investments. You can always check out the best commercial real estate loans to fund your initial financial needs and keep you going.

So, that was a quick basics guide on multi-family properties. Here are some tips you must know to evaluate or analyze multi-family investments. Read on!

Tips for analyzing multi-family investments to make the most out of your deals!

Tip # 1 – Look up the multi-family properties in the location that interests you

Buying an investment property always behind with having some options at hand and knowing the nature of properties that are available. Begin by taking the first simple step of looking up a few multi-family properties in the locality. Browse through tens or twenties of properties, examine their features, etc. and choose the best ones that match your expectations and needs. Bring it down by making a small list of multi-family properties, of say, 3 to 5 properties before you finalize on the one or two best properties you want to analyze deeply.

Tip # 2 – Be curious and ask some questions

The next tip would be to have a list of questions that you must be asking the property owner who is selling the property or with your property agent. Be curious enough to have an eye of scrutiny and an eye for smaller yet important details. Write down all the questions or the concerns that you can have and be prepared to ask these questions straight up to your property owner or the agent. While you’re looking up the property, you will naturally understand some of the main features of the property, but before you decide on buying the property, it is imperative that you know as many details as possible about the property. Here’s a small list of questions to begin with that you must be asking your property owner:

•    What is the purpose behind the sale? Or, why is the property owner selling the real estate property?

•    What are the vacancy rates of that property?

•    What are the major attractions of the property that can be used to bring in more potential tenants to the property? And, on the flip side, what are some of the drawbacks of the property that may show the potential clients away?

•    What are the probabilities of the increase in the value of the property? How long might that take?

•    What are the prices of the other similar properties around in the same location?

Remember that this list is to give you a bare idea of how you could get started with the website. Of course, you might have tens of other questions. Write them all down and remember to talk about all the concerns that you can have with your property sold. Talking about these questions with a couple of your trusted friends is also a great idea.

Tip # 3 – Eyes on the location of the property

Location of the property is perhaps the most significant deciding factors that’ll determine how much you can make from your long term investment. As a matter of rule, the location of the property plays a very prominent role in basing your final decision of whether or not to buy the property. To do this, you might want to consider conducting an in-depth and thorough real estate analysis. The first things you would want to check is the appreciation rates of the property. The second thing would be the value of the properties that are similar to this property. And, the third thing to look here would be at the probable reasons as to why tenants would like to move into this property.

Remember that no matter how beautiful the property looks or how peaceful it feels like to live in there if the location of the property isn’t a very attractive one, the chances are no tenants would like to move in. The proximity of the property to the workplace, supermarkets, malls, and theatres is some of the significant things that matter a lot when tenants are deciding between renting out the property. So, if you’re planning to make some serious returns from your multi-family properties investments, you should consider looking at the location aspects of the building, before anything else.

Tip # 4 – Numbers, numbers and numbers. Examine the numbers carefully!

Multi-family properties make for one of the best ways of earning lots in the world of real estate investing and looking into the numbers carefully is one of the most important things you need to do. The seller of the property will typically provide you a bare idea of the rental income and rental expenses history he or she has had in the past, and there’s nothing wrong in believing them, but you need to ensure that these figures are accurate and makes the best sense.

The problem here is that the seller of these properties is often very desperate to close the sale and tend to provide flowery figures which will make the deal look most attractive. But, is it that attractive? Is it as profitable an investment as they’re posing it to be? You need to figure that out carefully. Here is how you can do that.

•    Analyze your ROI or Return on Investment. Calculate it by considering the numbers that you believe true to your knowledge. Go ahead and calculate the capitalization rate of the property.

•    Next step would be to analyze the cash flow you are most probably generate by considering the facts that the owner has provided you based on the past rental income and their related rental expenses. At this point, be cautious enough and have an eye of skepticism before you buy the numbers at its face.

Just following these simple steps will help you understand better what you’re getting into and how much you can earn or make from the significant investment that you’re willing to make.

Tip # 5 – Find out the real numbers and negotiate to get the best deals

The next step would be to know how much profit these investments can be based on the numbers that you find out. As told earlier, the numbers that are provided by the sellers aren’t the final ones and needn’t necessarily be the right numbers. So, ask around and seek the help of real estate agents to arrive at figured that is true and then, move on to analyze the ROI, the probable rental income and the likely related rental expenses based on this data.

Once you’re convinced about your calculations, go ahead and quote a price that you would be happy to pay. Negotiate and close the deal! Explore the plethora of commercial real estate loans available for financing your properties before you go ahead with choosing the best plans on commercial real estate loans.

That was a comprehensive list of tips on how you can evaluate your multi-family properties to get the best of the best deals and make high returns from your investments. Private capital investors have been one of the leading real estate consulting and financing agencies since past many years, and we can provide the best help there is when it comes to helping you make the wisest decision with your real estate investments. Get in touch with us today, and we’d be glad to assist you in the best ways we possibly can.

Want to learn more? Get in touch with us today.

Similar Blog

A Comprehensive Guide to Buying Land for Your Hobby Farm

A Comprehensive Guide to Buying Land for Your Hobby Farm

Hobby farming has become very popular over the past decade, perhaps because more people want a simpler lifestyle—one that's connected to nature. If you're dreaming of owning a small piece of land for recreational farming, it's essential to understand what this entails...

What to Expect on the Closing of Your Farm Land Loan

What to Expect on the Closing of Your Farm Land Loan

Statistics reveal that there are over 11,000 farms in 39 states. Most of these businesses depend on farmland loans to keep running. Whether you want to buy land for farming or looking to improve on an existing agribusiness, an agricultural loan can support your...

Want to learn more? Get in touch with us today.

Our experienced team is ready to assist with your financing needs.

2101 Cedar Springs Road Suite 1050 Dallas, TX 75201