Are you thinking about getting started with investing in multifamily real estate? If so, you’ve come to the right place.
In this article, I will share with you several steps that you need to follow which will help you with the process of finding and purchasing your first multi-family investment property.
Find The Right Location To Buy Multifamily Real Estate
Even though multifamily properties can be found in almost any city across the United States, one of the most important things that you need to do when purchasing a multifamily property for your Investment Portfolio is to first identify a great location before searching for multifamily properties for sale in that area.
You may be asking “what classifies as a great location?”.
This is a great question to ask, there are a wide variety of things that you should look for in a city before you choose to purchase a multi-family property there.
Job Growth – Does the city have low unemployment? If so, who is hiring?
Crime Rate – How low is the local crime rate?
Public Transportation – Is there more than one source of public transportation?
Major Renovation – Are there any major renovation projects in the area like parks, warehouses, schools, or other buildings?
Distance To Other Up And Coming Cities – How close is your target city to other up and coming cities in the area?
City Vibe – Does the city have artists and musicians living there? If so, this is a good sign for Multifamily Real Estate because they generally make a city “cool”, and more people will want to move there because they like that creative energy.
Restaurants And Bars – How many restaurants and bars are there in the area? This is also an important factor to consider before buying a multifamily property because people like to be close to places to eat, drink, and entertainment.
Property Values – Are other multifamily properties in the city going up or down in value?
Rental Demand – Are rents high, or is there an oversupply of available properties in the area?
Search For Multifamily Real Estate
Once you find a potential city that you would like to consider investing in a multi-family property, the next step is to start searching for properties for available for sale there.
Thanks to the internet, you can easily search for multi-family properties online using a wide variety of different Real Estate websites. It’s also possible to find multifamily deals by connecting with other investors through websites like Bigger Pockets, Facebook groups, or any other type of website where Real Estate Investors connect on the internet.
If you’ve targeted a city that you want to invest in a multi-family property but, you’re unable to find any listings for available multi-family properties for sale in that area, the next step is to consider establishing a network of “bird dogs”.
Bird dogs are essentially people who will be watching for multi-family real estate properties for sale in the area where they live and work. In many cases, there are professional bird dogs who are used to finding deals for Real Estate Investors and know how the process works.
The key to success with hiring a bird dog is offering to pay them the commission either upfront, when they first give you the lead, or after you’ve been able to close on a property.
It may take some time for one or more bird dogs to find leads for you, so the key to success is staying in contact with them regularly and keep them motivated because as with any other commission sales opportunity if someone is unmotivated to keep working, it’s easy for them to grow distracted and to quickly lose interest.
Besides hiring one or more bird dogs in the city that you want to purchase a multi-family property, you may ultimately have to travel to that City in person and stay in a few days while “driving for dollars”.
Driving for dollars is one of the oldest ways that investors find multi-family and single-family properties in the United States. This practice refers to targeting different neighborhoods in a city where you want to purchase a property then driving to those area searching for available multi-family properties for sale or searching for properties that show obvious signs of disrepair.
What To Do When You Find A Property That You Want To Buy
Review The Listing Brochure – This will tell you things like the property address, building style, number of units, pro forma financials, financial analysis, asking price, comparable, and highlights from the broker.
Inspect The Property – If the multifamily property sounds like a property that you want to purchase, the next step is to learn more about the condition of the property by having it inspected.
Besides learning more about the actual property itself, you also want to find out who is selling the multifamily real estate property. This step is important because you want to determine if the property is owned by a private party or if its bank-owned.
After determining who owns the property, the next step is to find out the motivation of the seller since this will give you an understanding of why they are selling and what you can expect from them after submitting an offer.
Crunch The Numbers – After taking the time to inspect it, the next step is to calculate all of your expenses got the properties that the property will have and monthly cash flow that you can expect from each unit at the property plus you will need to determine your cap rate as well
Submit An Offer – Before submitting an offer, you will need to hire a commercial real estate broker and attorney to draft a letter of intent with a comprehensive proposal letter for you to submit to the seller. Once your offer is submitted, negotiations and closing may take some time but once your offer is approved, you will soon be the proud owner of your first multifamily property!
Contact Trier Capital
This article contains a “birds’ eye” view into the process of investing in multifamily property and the reality is that some investors may give up on investing in multifamily because they find it too time-consuming.
What’s the solution to the problem? How can you invest in your first multifamily real estate property without having to invest your time in finding the right multifamily property? The answer is to partner with Trier Capital.
Why work with us? We do all the hard work to find and acquire ideal properties, and then oversee asset management after purchase, while our investors sit back, relax, and receive tax-advantaged passive cash flow.
To learn more about how you can get started with building a portfolio of multifamily investments, without having to do the hard work yourself, contact me today at (630) 229-2383 or click here to connect with me online.