With office leasing slowed as a result of COVID, many investors are looking at diversifying their commercial real estate portfolio. One area that investors are looking at is multifamily housing. Though rental rates have been impacted by a coronavirus, there is a positive future outlook. The supply of housing has continued to outpace demand since the new building has slowed. There have been many impacts of this imbalance, but mostly it shows that multifamily properties are needed and are an interesting investment opportunity. If you’ve never invested in multifamily properties before, here are some tips to get you started.
Start With Location
The old adage “location, location, location” is true when it comes to investing in multifamily properties. You want to look for properties that provide a lot of access for their residents. You want properties near job zones, transportation, and in neighborhoods with low crime, good school districts, and walkable spaces. A good idea is to get a real estate analysis of the neighborhood. Avoid declining neighborhoods, as they will lead to problems down the line.
Get Detailed Paperwork
If you are looking at investing in an existing multifamily unit, obtain the detailed paperwork. Request income and expense statements, the vacancy rates, and proof of rental payments for at least the last ten years. This will give you a picture of the attractiveness of the property and how likely it is to stay an attractive property. Also, look into the vacancy rates of the neighborhood and make sure to ensure that it is an attractive market for renters.
Have Cash Reserves
Anytime you invest in a larger commercial property, it’s a good idea to be prepared for any unplanned event. This is very important with multifamily housing in case you experience a period of vacancy in your property or a sudden market decline. Have a strategy for reserving income for these periods and then you will never be caught off guard when an unexpected expense pops up.
Consider Property Management
If one of the things that have kept you out of the multifamily market is the time required to manage a property like this, you still have options. There are some excellent property management firms that can help manage this property. They will handle it all day today, so you can focus on growing your commercial real estate investment portfolio. If you are planning on using a property management company, make sure to assess the costs and factor that into your investment decision.
These are just some of the strategies that can help you get started in investing in multifamily properties. The commercial real estate team at Titan Lafayette Real Estate in Lafayette, IN can help. Our experts will help guide you through the investment process, help you find the right property for your portfolio, and answer any questions. Give us a call at 1-765-237-3417.