Looking to branch out a little and invest in steady streams of income? Think about multi-family dwellings.
“What are tenants willing to pay to occupy a unit?”
“This is the cornerstone of your investment”
The most obvious advantage of buying any income property is real estate investors can grow wealthy in the long run. Holding on to investment property and simply allowing other people’s money payoff the debt, even if there is no immediate cash flow, is what drives people into real estate investing. Moreover, because multifamily properties serve a basic need in that they provide shelter to those who are not ready to purchase a home just yet, the downside risk to multi-family investing is very limited.
OK, there may be a scant downside to owning rental property; it mostly concerns the management problems associated in dealing with tenants. Multi-family properties can be management intensive, and often the reason why investors who purchase rental property hire the services of a professional property management company to deal with the day-to-day issues of running the property. So investors can choose to minimize this obvious disadvantage.
How can an “everyday” homeowner start investing in apartments?
The first crucial piece to this puzzle is “using other people’s money.” The success or failure of the investment depends on the income the property generates to meet your debt and other obligations required to keep the property. The second piece of the puzzle is to understand that when buying any investment property you must establish a sound financing package.
Given that lenders evaluate multifamily real estate based on income stream and generally will structure a loan based on the property’s financial strength, keep in mind the significant role the principal of using other people’s money plays in financing the investment.
When applying for a loan on a multifamily property, present lenders with a clear and concise cash flow report; you’ll obtain a favorable financing package.
What are tenants willing to pay to occupy a unit? This is the cornerstone of your investment. It’s crucial to understand local rental market trends for vacancies and rental rates when buying a multifamily property. Rental market trends are easy to recognize, just watch the newspaper or drive around communities noting all rental properties that have vacancies.
The bottom line here is straightforward — Multifamily property provides investors the opportunity to build wealth and what a perfect time to start investing. Interest rates are low, there’s a steady stream of available tenants which can only contribute to a profit.
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About the Author: Carlos J. Gil is a licensed Real Estate Broker and President of Bold Real Estate Group. For more information please forward email to firstname.lastname@example.org