Rental properties are all the rage these days. As more and more young professionals turn their backs on America’s struggling housing market, multi-family residences like apartment buildings have become something of a golden goose for real estate investors. Before you start trawling an auction website for available properties, though, there are a few things about investing in multi-family residences that you should know.
1.) Plan for the Long Term.
A multi-family residence isn’t going to make you rich overnight. It can take years before you successfully transition from “paying the mortgage” to “turning a profit.” Instead of trying to flip these properties as if they’re houses, think of them as a way to supplement to your existing annual income over the long term. Your cash flow won’t be huge, but it will be safe and steady.
2.) Do Extensive Research Before Buying.
Investigative research is especially important when it comes to buying multi-family residences. Make sure a property’s rental rate, vacancy rate and tax standing all check out before you even consider making an offer. That way, you can make sure that your large financial commitment is also a wise one.
3.) Check the Location.
A multi-family property’s location is the best indicator of its potential. Look for properties that are highly visible and in a safe part of town. While I typically advise against investing in apartment buildings that need major renovations, I make an exception when the residence is located in a particularly desirable area. If a multi-family residence is sitting on a prime piece of real estate, you can be sure that you’ll make back all of the money you spend getting it up and running.
Take it from an industry professional – multi-family residences are a major commitment. Researching listings is hard work, and maintaining one of these properties after you buy it is even harder. However, if you remember to keep these three tips in mind when bidding on a multi-family residence at auction, you can be sure that your investment will pay off in the long run.
