Finding the right multifamily investment should be just as important as handling that investment properly. Starting off on the right foot will set you up for success, so here’s what to consider before you take on your first – or next – property.
Know What You Want And Where You Want To End Up
Knowing what you want from your investments and what your overall goals are will help steer you toward the right multifamily property. If your investment goals fall into a certain dollar range and you’re looking at properties that are unlikely to ever generate the revenue you are interested in seeing, you need to move on. The amount of risk you’re willing to take on is another factor. If, for example, you’re really risk-adverse, a more established multifamily property with solid tenants is place is probably a better choice for you than a diamond in the rough that needs renovations and has a high vacancy rate.
It’s important to take your strengths into account here. Women, for example, tend to excel when it comes to long-term investments. If you want to hold onto the property for a longer period of time, factor that into your goals.
Look At Your Timeline
Each property has its own features that will impact the rate of return as far as your timeline goes. If you’re comfortable with the long haul, you can take on a property that’s a great deal but will need work before it can generate any return for you. However, if you know you’ll need income from your purchase in the more immediate future, such as two years down the line, that type of property isn’t the best choice for you right now.
Have A List Of Dealmakers And Dealbreakers
When you know exactly what works for you and what won’t work in a multifamily investment, you can use those guidelines to help you make your final decision. Whether you feel the property has to have a pool because it’s in a warmer climate or it can’t be too outdated because you don’t want to invest in an overhaul right now, know exactly what you’re after and what you don’t want to see in your properties before you start a major search. It’s okay to have some “maybes” – things that you may accept or let go for the right property – but make sure you stick to your absolute dos and don’ts so you don’t end up regretting your investment later.
On top of all this, trust your instincts. If something is really bothering you about that “dream” property, it’s time to move onto the next prospect on the list.