In 2021, multifamily investing is one of the best ways to generate passive income every month while building wealth but, if you don’t know what you’re doing, there are a wide variety of multifamily investing mistakes that you can make.
In this article, I’ll provide you with some of the most common multifamily mistakes so that you can avoid making mistakes that some multifamily investors have made before you.
Mistake #1 – Doing Everything Alone
The first multifamily investing mistake that you don’t want to make is trying to do everything alone.
Even though you may be an investor who’s built your stock market portfolio alone, when it comes to multi-family investing, it’s a ‘team sport’ that requires you to have a group of professionals to assist you with finding the right property, financing the deal (unless you pay cash), closing, and ultimately managing that property.
Mistake #2 – Waiting To Finance Your Property
Let’s be honest, if you’re like most investors you’re probably going to be financing your first multi-family property.
If you know that you’re going to be financing your first deal, don’t wait until after you’ve found a property to finance it, start contacting lenders now so that you will be approved for financing once you have found the right property.
Mistake #3 – Moving Too Slow
During the process of searching for multi-family properties, another mistake that you don’t want to make is moving too slow.
Many investors make this mistake because they’re not exactly sure what they’re looking for, and they realize only when it’s too late that they’ve lost out a great deal because they were not ready to buy when the seller was ready to sell.
As long as you follow the principles of due diligence in multifamily investing, you can move forward with investing in a property with confidence, regardless of the speed of the deal is moving at.
Mistake #4 – Buying The Wrong Multifamily Property
Once you take the time to build your team, get pre-approved for financing, and ultimately start searching for a multi-family property, the next thing that you want to do is to know the type of multi-family property that you’re searching for.
Knowing what you’re searching for in a multi-family property is important because you may make the mistake of investing in the wrong property only to realize too late that it’s a property that’s more than you can handle.
Mistake #5 – Ignoring State And Federal Laws
Part of being a successful multifamily investor is knowing the laws, especially if you plan on managing your multifamily property yourself.
Some investors make the mistake of ignoring the laws when they are in a rush to fill vacancies at their multifamily property. Don’t let this happen to you!
If you’re not what type of person who likes to study the laws, it’s best to hire a property management company from the very beginning to manage your investment property.
Mistake #6 – Attempting To Predict The Future
As a multifamily investor, another mistake that you don’t want to make is trying to predict what the future is going to be for the rental market where your multifamily property is located.
Remember, there is no such thing as a crystal ball and the only thing that you can rely upon when it comes to investing in multifamily properties is the facts that you’ve learned from your due diligence.
When you take the time to thoroughly analyze everything that there is to know about the location, and the property itself, you can have confidence that you’re investing in the right multi-family property without making the mistake of investing in a property that ‘may’ turn around in the future.
Mistake #7 – Gambling On Potential Cash Flow
Last of all, the most important, another mistake that you don’t want to make when investing in a multi-family property is gambling on the ‘potential cash flow’ that you could earn from a property.
Things may always look good on paper but the reality is that a multi-family property can end up upside down very quickly.
This is why you always want to make sure that you focus on the fundamentals when investing in multifamily properties because this will help you to avoid the mistake of assuming that you’re going to have enough operating capital to sustain your debt service without really knowing that for sure.
Partner With Trier Capital
Are you an accredited investor who is ready to invest in multifamily properties but you don’t want to do all of the work necessary to source, acquire, and manage your property? We can help!
My company is a private equity firm that makes it easy for you to passively invest in lucrative apartment building syndications.
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 partnering with us, or to speak with me about our process for sourcing, acquiring, and managing multifamily properties, contact me today by calling (630) 229-2383 or click here to connect with me online.