As you probably already know, there are various strategies you can adopt in real estate investing. Moreover, each real estate investing strategy favors different types of real estate investments. When it comes to traditional rental real estate investing, however, there are two main property types the real estate investor chooses from. These are the single-family real estate properties for investing as well as the multi-family real estate properties.
Regardless of choosing to finance single-family real estate properties for investing or multi-family real estate properties, the real estate investor has to perform real estate analysis in order to find the best place to invest in real estate. Of course, each property type requires a specific approach. That is why, in this blog, we will review only one of the types of real estate investments. These are namely, the multi-family real estate properties. Where can you find the best multi-family investment property? What is the point of conducting real estate market analysis? How to perform real estate analysis? And how does it all link together? You can find all the answers below, so keep on reading.
#1 Multi-Family Real Estate Properties- What Are These?
Multi-family real estate properties are real estate investments constructed of multiple housing units. Multiple housing units simply refers to many available living spaces. An example of a property with multiple housing units is a block of flats.
The benefit of such multi-family real estate properties is that the real estate investor is able to easily increase the value of the property and, thus, his/her rental income. The so-called “forced appreciation” is easily applicable when talking about a multi-family investment property. This is because by improving something in a common area on the property, the investor influences positively the market value of all the housing units. Therefore, the rental income increases accordingly.
Another advantage of such investments is in regards to the vacancy rates. First of all, as such properties are more affordable to rent, they usually experience low vacancy rates. However, even if a unit or two are unoccupied that does not have such a big influence on the rental income as many other units generate profit. Thus, the vacancy rates are not something to worry about when investing in real estate property like this.
#2 How to Find Multi-Family Real Estate Properties for Sale
Investing in real estate is hard, we know that. Finding the best place to invest in real estate is even harder. However, you do not need to be a real estate agent or hire a real estate agent in order to find a property with a good return on investment.
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Your Real Estate Investment Network
There are many places where you can look for the best place to invest in real estate on your own. For example, think about your real estate investment network. Probably over the years, you have built a real estate investment network full of investors using different strategies and investing in different markets. These people can help you in finding a successful real estate investment.
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Real Estate Websites
If you have not built a strong network yet or you simply want to explore other options, real estate websites are a great opportunity. There are many real estate websites which can show you listings, depending on your criteria. A great benefit is the fact that you can access them anytime, anywhere.
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The “For Sale” Sign
The “for sale” sign is another thing to look for. When you are traveling somewhere or you are in your own city, look for a “for sale” sign. This way you may notice some great investment properties you would have missed otherwise. Moreover, you will be able to get a more realistic impression than from a photo.
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Do Not Forget About Foreclosures
Foreclosures occur for various reasons. However, the most common one is the inability of the owner to keep on paying his/her mortgage payments. Thus, the lender, typically a bank, legally seizes the property and sells it at a low price. Their aim is to quickly recover the missing money. Therefore, foreclosures might give you the opportunity to invest in a property you would not be able to afford otherwise. That is why it is advisable you keep one eye open for such possibilities.
See! You can successfully find multi-family real estate properties without the help of a real estate agent. Let’s see what else you need to do.
#3 The Best Neighborhood and City for Investing in Multi-Family Investment Property
Finding the best neighborhood and city depends on many variables. One of the key factors is if the area is suitable for the investment strategy you have decided to implement. Check the demand for rentals in your area. If you want to purchase multi-family real estate properties at a location with demand for single-family real estate properties for investing, you should either choose a new location or a different investing strategy. The demand is not all; do research and base your decision on more data. Also, remember that the best neighborhood is not necessarily the “most wanted” one, but the one in which properties have a higher return on investment.
#4 Conducting Real Estate Analysis is Crucial
As previously mentioned, research is an essential part of finding the best multi-family real estate properties. As this task is hard to perform manually, here are the best real estate tools you can use to guide you through the process.
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Real Estate Market Analysis: Use Mashvisor’s Heatmap
Mashvisor’s heatmap presents a map which shows you different cities/neighborhoods/properties on the basis of their performance. This way, you just need to look at the map and you can quickly understand the real estate market situation. Additionally, Mashvisor’s heatmap uses a color scheme to make the process of using the tool as quick and as efficient as possible. There are three colors- green, orange and red. In green are the best performing properties. In orange are the averagely performing investments, while in red- the ones with performance lower than the average. Do you want to learn more? Make sure to check out “How to Find the Best Investment Property Using a Heatmap”.
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Real Estate Market Analysis: Mashvisor’s Investment Property Calculator
If you want to perform more detailed analysis, you can use Mashvisor’s investment property calculator. Mashvisor’s investment property calculator computes many real estate metrics such as return on investment, cash on cash return, cap rate, potential rental income, etc. Additionally, the tool gives you detailed information about the chosen properties as well as their location. Needless to say, this way you can compare multi-family real estate properties with an ease and choose the best one. To learn more about the topic, you should definitely read “Investment Property Calculator For Analyzing Real Estate Investments”.
Are you willing to learn more about real estate? For instance, “How Do You Find Off Market Properties?” Do you want to make use of the real estate investing tools? Sign up for Mashvisor. To start your 14-day free trial with Mashvisor and subscribe to our services with a 20% discount after, click here.