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Multifamily Real Estate Investing: 3 Things You Need to Get Involved

Written by Posted On Thursday, 31 December 2015 12:00

If you’re looking at expanding your real estate investment by purchasing a multifamily home, you’re in good company. This lucrative business venture is becoming a more popular investing route for varied reasons. From appreciation benefits to higher rent income, many are jumping on the bandwagon, and if you’re considering joining the ranks of those profiting off of these investments, now is the time to act.

    -Higher Rent Income

Perhaps the most enticing reason comes from cash flow. Multifamily homes always bring in more cash than single-family alternatives, for the simple reason that there are more rent payments coming in each month.

-Economies of Scale

Economies of scale factor greatly in many investors decision to purchases a multi-unit building. Because multifamily homes share common space, repairs and maintenance become a one-time job instead of a more common occurrence. You’ll also save money in terms of bulk materials; painting all of your apartments in similar color schemes will save you money on paint, buying fixtures in bulk will save valuable time and money when it comes to repairs, and maintaining common materials between apartments will cultivate a cohesive, professional look that will attract tenants.

-The Benefits of Appreciation

You’ll put more money down to buy a multifamily unit, but you’ll also receive bigger profits when it comes time to sell due to the rise in dollar appreciation.

If you’re ready to get involved and make your financial mark with a multi-unit real estate investment, here are the three top things you’ll need to make your venture come true.

Sheer Capital

If you’re looking to get involved in multifamily real estate, you’ll need to be prepared with a large amount of money, or at least equity, to truly get involved. It’s rare these days to find a low equity deal, and banks and private lenders alike have tightened the reins in terms of who they will offer money to. Consider using a hard money lender, such as Source Capital, to acquire the money you need and begin the process of paying back as quickly as possible once you’re seeing returns on your investment.  

Free Time

Perhaps one of our most valuable commodities, you’ll need a bevy of time if you’re looking to get involved in a multi-unit venture. Finding the right units, managing them once you have them, and maintenance on the buildings themselves can mean huge cuts on personal time. You’ll need to manage employees to help care for your properties, be on call to tenants who may experience unforeseen emergency issues, and take care of move outs and move-ins in the case of turnover. If these time requirements seem like too hefty a strain with your current schedule consider hiring a property management team, like Hunt, to take care of the day-to-day grind. The investment is often worth the stress off your back.

Unexpected Experience

The third thing you’ll need is experience, in areas you might not have expected. Repairs, tenant screening, and the like might be expected necessities, but what about taxes? Renting affordable, clean, up-to-code housing often qualifies you for tax breaks with the government, meaning more deductions and more money in your pocket. As your rental is a business, you have the opportunity to depreciate a bevy of costs from your property. This will require thorough knowledge of the tax system, and it may be in your best interest to hire a CPA or other tax professional, such as Profitwise Accounting, that can guide you through the deduction and incentive process.

 

Industry signs point towards a rise in multifamily real estate, with higher rent income, economies of scale, and dollar appreciation working in every investor’s favor. If you’ve got the capital, time, and experience needed to make this venture successful, multifamily real estate investment may be the right choice for you—and your bottom line. 

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