Multifamily investment has been a popular investment strategy for the past decade, not only for seasoned real estate professionals, but for new, smaller investors looking to add controllable assets to their investment portfolios. Here are a few things to consider if you're entering the multifamily market.
Give careful consideration to your location.
The location of your rental property will mean the difference between success and failure, so choosing where to purchase your asset is of the utmost importance. Carefully research employment and population data for your desired market. Look for job diversity and steady growth, and don't let your judgment be entirely affected by trends or herd mentality.Start small.
If you're seeking a flexible multifamily approach, it is advisable to choose smaller properties as your entry-level strategy. Duplex investments may lead to impressive long-term ROI, because they allow you the same tax benefits and incentives of larger multifamily properties, yet are accessible to investors who don't have large starting funds. They are easier to sell than large complexes if you ever need to liquidate, and you can purchase several in different locations to shelter you if one market experiences an economic downturn. Moreover, duplex investment is a great gateway option if you want to move to bigger properties!Weigh the benefits and disadvantages of using management companies.
If you have the time and ability to perform frequent repairs and maintenance to your property, as well as manage the tenant screenings, agreements, disputes, and the potential (and actual) evictions, you may be able to comfortably act as your own landlord. But think carefully about the time and energy expenditure. If you decide that those responsibilities should be outsourced, a management company will be the way to go.Property management companies can be excellent resources, but you'll have to research multiple firms, and interview at least three prior to selection, and always get referrals.
While the barrier to entry is higher with multifamily investment than it is with other asset classes, new investors can achieve success with a manageable, calculated approach. Just make sure your strategy is designed to meet your specific needs and goals, and you'll discover that multifamily investment can offer you solid financial security.
Investar USA is a real estate investment group specializing in properties throughout the U.S. Southwest. Investar USA is located in Phoenix, Arizona.
