Multi-family properties are one of the best investments that new investors can make. Unlike single-family homes, when multi-family units are unoccupied, the occupied units are still generating income. Multi-family units also offer the widest range of financing opportunities and give you the best shot at least recouping your initial investment if things don’t go as planned. Here is a 5-step process to multi-family property investing.
- Set specific parameters around what you are looking for
To find the right deal, you’re going to have to look at a lot of properties and not all of them will be right for you. For instance, you need to have an idea of how many units you can handle, how much of a budget you have up front and how to finance it. The more specific you are about what you are looking for, the more quickly you will recognize it when you see it.
- Invest a few minutes each day in looking at properties
Finding just the right deal can take some time, so it’s best to settle in for the long haul. Investing several hours each day won’t generally help the search go any faster. If the right property isn’t there, it isn’t there. Investing 20-30 minutes each day will help familiarize you with what is out there and also help you further narrow down exactly what you are and aren’t looking for.
- Only look at properties that meet 80% of your criteria
Looking online can be time consuming enough, but then you have to physically go out and look at properties. Don’t waste your time looking at properties you aren’t genuinely excited about or that don’t have real potential. While you may never find a property that meets 100% of your criteria, don’t even waste time on anything that doesn’t meet at least 80%.
- Crunch the numbers hard
Once you have found a property that has serious potential, then you want to do serious number crunching. This is why having a basic formula up front is important. Doing the numbers in depth can take several hours, so you don’t have time to do that with every property. If the numbers add up, before you put in an offer, make sure you also have multiple exit strategies.
- Make an offer
Philosophies on making an offer vary widely and there is really no right or wrong way. Some people believe in putting your highest offer in first, while others feel it is better to start with a lowball offer. Investing is a lifelong learning process, so if you lose out, you will still have learned something in the process.