Generally, multi-family properties are viewed as a safe investment, according to Nick Debeyiotis. That being said, there are a few factors that you’ll want to consider when deciding whether a multi-family property is a good fit for your investment needs.
Can You Afford a Property Management Company?
If you’re working full-time at a job outside of caring for your investments, it can be a smart move to hire a property management company to take care of the needs of your tenants. From collecting rent to processing applications to completing repairs, taking care of a rental can be taxing for someone who is also working another job. If you can swing it, hiring a property management company can make your life much easier.
Consider the Area
You can change a lot of things about the multi-family property that you purchase, but you can’t change the location. Considering whether the property is in a desirable location is an important factor when it comes to deciding whether the property is the right fit for you. It can be helpful to talk with the seller about how long the tenants have stayed in the building and whether they’ve had trouble filling vacancies.
Down Payment Matters
For many multi-family properties, you’ll need to put down at least a 20% down payment. This can be a hefty sum of cash if you’re purchasing a large property. If you don’t have the cash but are interested in purchasing a multi-family property, talk with a bank about your options. You may also consider investing in a single-family property to get your start with rental ownership and management before moving onto a multi-family property.
Talk with Tenants
While a seller will be eager to get you to move forward with the purchasing process, the person who owns the property will make little difference to current tenants. Nick Debeyiotis recommends talking with tenants about their experience living at the property, if possible. You’ll be able to get a sense of repairs, how often other tenants have moved in and out of the property, and other issues that can help you tune in to whether investing in the property is a smart investment move for you.
If you’re ready to get started with real estate investing and have the capital to make a down payment and hire a property management company, it’s likely a smart move to make a purchase, according to Nick Debeyiotis. If you’re still unsure of whether purchasing a multi-family property is the right fit for your investment portfolio, it’s a good idea to reach out to a financial planner who can steer you in the right direction.
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