“Guru- an influential teacher or popular expert.” A real estate guru-Mashvisor. We consider ourselves a “popular expert” wouldn’t you agree? On today’s episode of “Mashvisor the Real Estate Guru,” we’re going to give some guru advice to buy multifamily properties.
As a real estate investor, it is a clear advantage to be able to say “I know everything there is to know to buy multifamily properties.” That way, when you go to purchase an investment property, you know your stuff.
You’ll also know your numbers because you’re going to use Mashvisor’s product to complete a property valuation. You’re going to use the investment property analysis software to get all the numbers you need.
In a matter of clicks, you’ll have the real estate analytics like cash on cash return, cap rate, occupancy rate, and more on your screen. You will have the ultimate real estate investing tools all in one place: Mashvisor.
We sound more like a fortune teller here than a guru, so let’s switch back. Here, we give you the top real estate investing tips to buy multifamily properties. Prepare to get “guru’d.”
Mashvisor Dictionary- Multifamily Investing
Before we dive into what to be aware of when choosing multifamily investing, we want to make sure you know what investing in multifamily homes even is. This is the “teacher” portion of the guru definition we gave up there.
Multi-family homes are a classification of property types that consist of multiple separate housing units. This is where tenants of your choice are contained in one building or several buildings within one complex. A good example would be an apartment building.
We want to keep it as simple as possible, so that should give you a general idea of what it means to buy multifamily properties.
Mashvisor Guru Tip #1 to Buy Multifamily Properties- Location
We know, we know, you’ve heard it everywhere. Location, location, location in real estate. We have to include this as one of our real estate investing tips because every property need is different.
Some property investments will have the focus on specific location features more than other property types. One thing that they all have in common: it needs to be a good location.
We suggest choosing a tenant mix you want to focus on. This means, who are the customers of your investment property? Are they families, or will they be young adults? Are you looking for short-term rental attractive location features (like vacation sites), or more long-term (like yearly tenants)?
Figure out the property’s purpose, and that will make the location a whole lot easier to figure out. Location criteria to buy multifamily properties in usually consists of the of low crime rates, close proximity to schools, and an overall good atmosphere.
The location also has a tendency of controlling the rental rates, types of tenants that will be attracted to the multifamily property, and vacancy rates. Bad neighborhoods typically mean higher vacancy rates, which means no money in your pocket. Again, location, location, location.
Mashvisor Guru Tip #2 to Buy Multifamily Properties- It’s Gotta Look & Feel Good
Property condition plays a huge role when you look to buy multifamily properties. You need to do a little pretending when it comes to this. Put yourself in the shoes of your potential tenants.
Do you like the feel of the investment property? Is it something you, yourself, could call home if you lived in it? Does it have any “warm” feeling or give you butterflies in your stomach? You want it to be able to transition from a multifamily property to a multifamily home.
Then comes the physical features of the house. Does it actually look good? This does not mean just the features of the construction of the house. Landscaping, heating, electricity, water pipes, these are all important things to look out for.
The best thing you can do is get the home inspected. For a small fee, you can get the home checked out. If you ask us, it is worth it in the long run. Paying a couple hundred dollars will save you potentially thousands in damages. Get a gist of the property.
Mashvisor Guru Tip #3 to Buy Multifamily Properties-Use Mashvisor
Yes, use Mashvisor. To buy multifamily properties, you need to see how you’re going to financially benefit from it. We told you what Mashvisor’s purpose is: to lay the investment property numbers on real estate investors like you. All you have to do is type nine little letters, click enter, and sign up! As simple as 1, 2, 3.
To start your 14-day free trial with Mashvisor and subscribe to our services with a 20% discount after, click here.
With the benefit of getting all the real estate analytics you need, we think the little effort is worth going for it. To buy multifamily properties you can be confident will make you money, use Mashvisor.
Related: Investment Analysis Software: Real Estate Investing
Mashvisor Guru Tip #4 to Buy Multifamily Properties-Check Out Rent Roll and Lease Expirations
We can both agree that cash flow is one way to ensure the property you purchase will be considered a successful investment. One way to evaluate the cash flow of the investment property is to look at the rent roll.
The rent roll tells you all the details of tenants and their lease. You can review things like the start and end date, monthly rent amount, and security deposit.
This is especially helpful whether you’re a beginner in real estate or an experienced real estate investor. Why? You get a gist of how things were going in the multifamily home before you came in. To buy multifamily properties, you should get to know its past. This way, you can get a small glimpse of what worked for the previous owner, and how you will tweak it for your needs.
Related: Question of the Day: How Much Rent Should I Charge?
Getting to know past rent roll can also help in the decision of whether you’re going for month-to-month leases or one-year leases. In the real estate business, rental properties that are primarily month-to-month leases may be worth less than a one-year lease property.
However, when you buy multifamily properties and intend to make renovations, a month-to-month lease is more desirable. This lease strategy allows you to get started on those renovations sooner, while still avoiding the expense of early termination.
You want to take a look at the lease expirations, as most expirations are staggered without a specific short window. Knowing them will allow you to manage vacancy rates while keeping cash flow consistent. You never want to find yourself in a situation where a large number of tenants vacate all at once. “Poof” goes the cash flow.
Related: How to Boost Your Rental Income with Green Leasing
Time to Buy Multifamily Properties
Mashvisor is willing to give you tips on all things real estate, anytime. However, we can’t push you to implement these tips. Well, we could, but we won’t because we want to stay friends. As a real estate investor looking to buy multifamily properties, you want to be able to be successful while still efficient.
Keeping these tips in mind is bound to help you grow as a real estate investor, no matter the real estate investment strategies you choose. We will always be your real estate guru. Now go out and buy multifamily properties!