If one of your goals for the new year is to focus on real estate deals that produce high monthly cashflow ? then you should be considering Multi-Family properties.? Historically, investors get the highest rental cashflow returns in areas where most people are renters and in areas where there are notable shortages of rental housing.
Multi-Family does not have to mean a sprawling Apartment Complex, or a 20 floor high rise. Duplexes, Town homes, Small Condo and Apartment Communities (under 50 units) are everyday affordable real estate deals that you can find throughout the united states.
10 Steps For Buying A Multi-Family Property
- Figure out your Buying Strategy
- High Rental Return (monthly cashflow)
- Value Appreciation (huge payout when you sell)
- Distressed Sellers (good properties at slight discount)
- Distressed Properties (discounted fixers)
- Build/Contact Your Virtual Team
- Realtor/Commercial Broker
- Title Company
- Insurance Agent (did you know they can tell you about past claims?)
- Accountant/Bookeeper (needed after purchase)
- Property Inspector
- Appraiser
- Surveyor (banks usually require you to pay for a report)
- Contractor/Handyman
- Property Manager/On site staff
- Work Out Financing Options
- Register with a Hard Money Lender
- Get a Proof of Funds letter
- Notarized Bank Balance Statement
- Pre-Approval Bank Loan Letter
- Consider you Entity Structure
- Think asset protection for your state
- Think tax advantages for your area
- Set A Budget & Prowl For Deals
- Use Craigslist, Zilllow, Trulia, Loopnet databases
- Ask Realtor/Broker to set up email alerts
- Show Interest & Make An Offer
- Due Diligence
- Order a property inspection
- Review the rent rolls and past tax returns for the property
- Order a market rent analysis from realtor
- Deal/No Deal
- Consider if the information gathered during due diligence changes your mind about your plans for the property
- Renegotiate terms of your offer
- Verify your financing options for the specific property
- Rainy Day Plan
- Prepare for crisis with a plan for the worse or explore exit strategies
- Keep cash on hand to fund repairs in the beginning
- Management
- Hire a Property Management Firm definitely if you are more than 200 miles away
- If you decide to maintain it your self, consider having a handyman live on site for discounted rent
Multi-Family investment properties offer real estate investors many advantages: cashflow, tax advantages, appreciation, etc. You can start out small by buying a Duplex and Fourplex in your area just to wet you feet with a income producing property.
Source: http://www.reiclub.com/realestateblog/10-steps-to-buying-multi-family-properties/
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