7 Tips for Investing in Multi-family Properties for the First Time
7 Tips for Investing in Multi-family Properties for the First Time
As their names suggest, single family homes are designed to house a single family, and multi-family homes are designed to house multiple families, usually indifferent, segmented units.
In a duplex, you typically have a single building bifurcated so that two different families can live in two different sections. Triplexes and fourplexes are similar. There are also apartment buildings, which allow you to have many different units in a single complex.
Investing in multi-family properties can be highly beneficial for your real estate investing strategy. But there are also some drawbacks and caveats you’ll need to keep in mind. If you’re investing in these types of properties for the first time, it’s important to know what you’re getting into.
Benefits of Multi-family Properties
Let’s start by taking a look at the benefits of multi-family properties as they compare to single family properties. No matter what type of rental property you invest in, you’ll see the benefits of passive income and (ideally) property appreciation over time. But these are the distinct benefits of multi-family properties:
Downsides of Multi-family Properties
That said, there are some downsides you’ll need to keep in mind as well.
Important Tips for Maximizing Results From Multi-Family Properties
So how can you maximize the benefits while minimizing the downsides of these types of properties?
- Prioritize the location. As with other types of real estate investing, location should be one of your most importantly considered priorities. If you choose a multi-family property in a good location, you’ll benefit from better tenants, higher rent prices, less competition, and fewer headaches overall. Finding a good location can be tough, and even then, you’ll have to contend with competition – but it’s all worth it if it means getting the right property.
- Screen tenants thoroughly. Difficult tenants are always a problem, but for the most part, you can avoid these issues by screening your tenants thoroughly. It’s tempting to fill your properties as quickly as possible, but it’s usually better to take your time, do thorough background checks, and weed out candidates who aren’t likely to be a good fit for your property or community.
- Focus on tenant retention. Once you do find good tenants, focus on keeping them. People who invest in multi-family properties sometimes get overconfident because multi-family properties are less susceptible to income volatility. However, it’s still expensive when tenants leave prematurely. You can prevent tenants from leaving by building good relationships with them, responding to requests quickly, and offering support when warranted.
- Hire a property manager. Properties get more complex when you add more units to them, and if you have a portfolio with many multi-family properties, your management responsibilities could quickly become overwhelming. That’s why it pays to hire a property management company that can take care of almost everything on your behalf.
- Upgrade, improve, and prevent. When you purchase a new multi-family property, spend some time upgrading, improving, and updating it. Your goal is to put the property in excellent condition, so you prevent the majority of functional problems you might encounter in the future.
- Consolidate your maintenance plans. Practicing maintenance in multiple multi-family properties is time-consuming and complex if you don’t have a thorough strategy in place proactively. Make sure to consolidate your maintenance plans so you can prevent most problems – and fix the unpreventable ones quickly.
- Diversify your portfolio. Finally, work on diversifying your portfolio. It pays to have many different types of properties from many different areas in your possession, so you’re better insulated against economic volatility.
Multi-Family Properties – The Perfect Fit
Are multi-family properties the perfect fit for your investment goals and your budding real estate portfolio? Or are you leaning toward single family residential homes? Whatever your property management strategy happens to be, we have professionals who can support you.
Contact us today to find out more about how Green Residential can improve your real estate investing strategy!