Investing In A Multi-Unit Rental Property
Have you been considering purchasing a multifamily investment property, but are wondering how big of a hassle it can be? While this can be a great way to build net worth as well as dramatically increase your income, it can also be quite the undertaking. Here are some tips to help you get started being a landlord.
Live On The Property And Save Big
Consider purchasing a home with four units or less and live in one of the units. Doing so will qualify you for owner-occupied financing with little money down. This may help you be on your way to purchasing an additional property sooner because you will have a lower debt to income ratio.
Assemble A Knowledgeable Team
Build yourself a proper team of people including a broker, a lawyer and a lender. Having the guidance of professionals to guide you through will ease the stressors should any issues arise. Another person to think of adding to your team is a contractor or a group of local tradesmen that you trust to help you assess any issues a building may have. An expert in all of the major components is something to consider.
Get All Of The Details Upfront And Be Prepared
Ask for detailed paperwork of the property. Request income and expense statements, current rental agreements, and service contracts. Become familiar with the vacancy rate in the neighborhood. Talk to tenants to discuss any concerns about the building’s condition.
Consider the value of the property carefully. The value of the property is based on income and expenses of the building rather than the square foot of the building. This is called the net operating income. This number is divided by the typical rate of return for a market area to determine fair market value
Keep cash reserves on hand in case anything unexpected arises. Think vacancies and emergency repairs to the building. You need to be prepared for everything in order to be a successful landlord.
Is A Multi-Family Landlord In Your Future?
Taking on a multifamily investment property can mean big income, but be weary of the potential big headaches that might come with it. Plan accordingly and get yourself a great group of professionals you can trust to help you along the way. With some luck, you’ll be on your way to becoming a landlord to several new tenants.
Get in touch today!