Real Estate

8 Factors to Consider When Purchasing a Multi-Family Income Property

Most people would benefit greatly from including real estate investing as a component of their overall investment strategy. As a licensed real estate seller, for over a decade, I have identified various opportunities, both for my clients and for my own personal investment portfolio, and I believe, when this is done prudently and in a well-informed manner. , is extremely beneficial. With that in mind, this article will attempt to examine, discuss, and briefly review 8 significant and relevant factors to consider and pay attention to, to determine which possibilities make the most sense, from an investment perspective.

one. Purchase price: Know your budget and personal limitations. Remember, financing properties that are not owner-occupied is generally more difficult and a bit more expensive. Most lenders review rental listings to see if the investment makes sense. Be careful buying what you feel comfortable with!

two. Real estate taxes: When calculating the Return on Investment, or KINGDon’t forget to consider the costs of real estate taxes (and recognize that these generally increase each year).

3. Monthly transportation charges: Take into account all the ingredients, related to your total monthly transportation charges! This includes: mortgage-related costs (interest, principal, security deposit), taxes, utilities, reserves for maintenance and repairs, etc.

Four. Status/maintenance: Examine the general condition of the prospective property. What might require immediate attention and how much might it cost? What do you expect annual maintenance and ip-keep to be? Remember, if you don’t need anything, you’ll probably pay more to buy it, so keep your total costs in mind!

5. Repairs needed: What might be needed immediately to fix and/or repair, in order to avoid major problems/challenges in the future? Distinguish between necessary and optional repairs, and create a realistic schedule and timeline, with costs determined!

6. Necessary reforms: When looking at an investment property, use a different mindset than when looking at your personal residence. Always consider the advantages, needs, and costs of renovations, and consider multiple options, including pros and cons.

7. Potential Income – Roll; Return of investment (KING): Examine the rent – current roll, as well as the potential, if it does certain renovations, etc. This return on investment, or ROI, is essential to making sound decisions with this type of real estate. However, avoid overestimating your income and estimate conservatively. Aim for a 6% return, which means earning at least a 6% annual return on your investment, which includes the original purchase cost and any anticipated renovations and repairs in the first two to three years. Also, look for a Cash Flow – positive scenario, where income received exceeds monthly expenses. Also, base income on only 10 months of income, taking into account all expenses, in order to be positioned, in case of vacancies and/or rotations!

8. How easy to rent: Consider the local area and determine if it should be fairly easy to rent units, due to demand, convenience, etc!

Investment properties often make great investments, but only when done smartly, carefully and preparedly. Follow these 8 steps to be better prepared!

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