Types of Multifamily Buildings
Duplex, Triplex and Fourplex Properties: Originally single-family homes, these larger houses have been separated into two, three, or four units that are rented out to tenants. These apartments are known for their unique character and architecture.
Apartment Building: Apartment building come in a wide range of sizes and contain multiple units where families can reside. One multifamily apartment building may feature one or more floorplan types. These multifamily units may also include amenities that are shared among tenants such as laundry rooms, lounges, a gym, and more.
Condominium: Condominiums may look just like apartment buildings, but instead of being rented out, units are typically owned separately. The condominium owner must take care of the maintenance of the exterior of the building and shared areas while individual condo owners must maintain their own units.
Finding Lucrative Multifamily Real Estate Sale
Real estate investors can make great returns by purchasing multifamily homes for sale. However, before you take the plunge, there are some important considerations:
Your Experience: If you’re looking to make your first multifamily building acquisition, make sure you don’t bite off more than you can chew. Managing multifamily real estate well requires you to invest a considerable amount of your own time while you learn how it all works.
If you can find duplexes for sale near you, these units are usually easier to manage for newcomers to real estate. Triplexes and fourplexes are also a reasonable choice for first-time investors. As you build your experience, you can then consider something larger like a full apartment building.
Untapped Income Potential: An ideal property to purchase will exhibit signs of untapped income potential. Perhaps rents are below the average for the area. Or maybe the owner hasn’t installed a laundry room, vending machines, or offered storage space or parking, all of which bring in additional income. With quickly achievable improvements such as new paint and the installation of appliances, among others, you can exploit the untapped income potential and make the property much more profitable.
Investment Analysis: You should conduct a thorough analysis of the property’s current financial performance before purchasing. Moreover, you should review how much more you can achieve with modest investments to the property. First, compare the going rate for rent for similar properties (considering any renovations you plan to do) to the property’s current rental rate. Then, add up costs such as maintenance, the mortgage, and any improvements you will do. You should also compare the costs to your potential income to see how quickly you can expect to earn a return on your investment.
Tenant Needs: When choosing a property, seek multifamily properties for sale that are attractive to tenants. Otherwise, you’ll suffer from low occupancy rates or poor tenant quality. A central location with easy access to public transportation and proximity to areas of employment and retail is ideal. In addition, tenants might be lured in by amenities like a gym, pool, parking, a party room, etc. Consider whether the property already has these features or whether they could be added.
Do your homework ahead of making an investment in multifamily property and you’ll enjoy excellent returns.