It doesn’t matter if you are a new or experienced multifamily real estate investor, one of the things that you’re going to find as you search for deals nationwide is cheap multifamily properties.
Cheap multi-family properties are everywhere across the United States and it’s not uncommon for some multifamily investors to throw caution to the wind (at least once in their careers) and purchase a cheap multi-family property.
The internet makes it easy to find cheap multi-family properties because any investor can easily find these deals, which are often located in questionable areas across the United States.
What’s sad about these deals is that the investor who purchases a cheap multi-family property does so under the misconception that purchasing a cheap property will help them to accomplish their real estate investing goals fast.
After purchasing a cheap multi-family property, the investor typically finds out the hard way that the reason why the property is priced cheap is because it’s going to cost them potentially tens of thousands of dollars more than they thought just to get that property in rent-ready condition.
Don’t Make The Mistake Of Investing In Cheap Multifamily Properties
If you’re currently thinking about buying a cheap multi-family property, here are several reasons why you should not purchase that property:
Reason #1 – Cheap Multifamily Properties Are Often In Declining Areas
The first reason to avoid investing in a cheap multi-family property is that these properties are typically in parts of town that are on the decline economically rather than areas that are highly desirable to renters.
Even though the multifamily property may be cheap, the truth is that once you invest in the property, you may find it difficult to attract renters to that property because the average renter does not want to live in a property that’s located in an area which doesn’t offer them good-paying jobs or things to do.
Reason #2 – Cheap Multifamily Properties Often Attract Cheap Tenants
Another reason to say no to buying cheap multi-family properties is the fact that cheap multifamily properties often attract cheap tenants who take little to no pride of ownership in their rentals.
Reason #3 – Cheap Multifamily Properties Can Also Mean Higher Maintenance Costs
It doesn’t matter if you are a new or inexperienced multi-family real estate investor, maintenance costs can kill your cash flow every month.
Yes, the property may be cheap but, you may find that you are having to invest money in that property regularly including replacing things like water heaters and other expensive items on an annual basis that will ultimately eat into your cash flow and turn that cheap property into an expensive property.
Reason #4 – Cheap Multifamily Properties Can Be Harder To Insure
Buying a cheap multi-family property may be easy but, you may also find that it’s going to be difficult to ensure that property for a reasonable cost and in some cases, the cost to insure the property may be higher than the actual value of the property itself.
Reason #5 – Cheap Multifamily Properties Have Fewer Exit Strategies
As I’ve mentioned in previous blog posts, one of your goals as a multifamily investor (besides earning passive income) should always be to have an exit strategy for every property that you invest in.
Having an exit strategy is essential with every property is essential but when you buy a cheap multi-family property, it’s going to be impossible to have an exit strategy in place because you’re going to find it difficult to find qualified buyers for that property when you’re ready to sell it.
Reason #6 – Cheap Multifamily Properties Can Be Harder To Finance
Let’s say that you are planning on buying a cheap multi-family property but you need a mortgage later on to finance repairs that the property may need.
Most lenders are going to balk at financing a cheap multi-family property, especially if it’s located in an area that’s on the decline economically. This means that if you are unable to qualify for a mortgage loan, you may find yourself having to take risky loans to cover the repairs that the property needs.
Reason #7 – Most Cheap Multifamily Properties Have Lower Depreciation
Last of all, but most important, another reason to avoid investing in a cheap multi-family property is that cheap properties tend to have lower depreciation than properties that are priced competitively in good areas.
When you invest in a property that has low depreciation, this means that you will be unable to utilize many of the tax incentives and benefits that come from owning real estate.
Ultimately, your decision to invest in a cheap multi-family property is up to you. I hope that after reading this article you will take the time to thoroughly analyze that cheap property and see for yourself that even though the property may be cheap, it’s going to be more expensive than you thought.
Partner With Trier Capital
At Trier Capital, we offer a simple step-by-step process that allows you to accelerate your wealth creation by investing in multifamily properties, so you can live a magnificent life on your terms, whether that means traveling the world, spending more time with family and friends, or making an impact.
Let us save you the time, money, and hassle of searching for multi-family properties and managing them yourself.
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 the benefits that come from partnering with our company contact me today by calling (630) 229-2383 or click here to connect with me online.