Having multi-family real estate can be a good idea as your passive income. You may think that you should start it with a big thing like huge apartments, but actually you can start from small things first such as duplexes. Of course, the type of multi-family real estate that you want to have depends on the budget that you have.
Multi-family real estate is a property type that consists of some units so that it can house more than one family. Some examples of multi-family real estate are apartment complexes, townhomes, duplexes, and condo complexes. One of the benefits of having multi-family real estate is that you will have more than one revenue stream. Nevertheless, you also need to note that the costs for maintenance and administration are also bigger.
If you want to have multi-family real estate and this is your first time to start it, you need to find out what you should do.
Get Much Information About Multi-Family Real Estate Business
First thing first, it is very important for you to get as much information about the multi-family real estate business. You need to find information about the types of multi-family real estate, profitable location, proper way to maintain it, your property financing, etc. After getting the information, you will be able to have an idea about what type of multi-family real estate business that you want to have based on your budget, how you will maintain it, where to choose the location that is profitable, etc.
Choose Rental Strategy That You Want to Do
There are two rental strategies namely long-term rental or short-term rental. If you choose a long-term rental, it means that you will be able to get a steady income during the rental term, for example, the tenants rent it for a year. Then, you will get a steady income for a year. If you choose a short-term rental, you can get higher rental income and flexibility. It is because you will charge the tenants per night and you can charge higher when it is on peak season.
Find Profitable Locations
After you decide the rental strategy that you want to use for renting out your multi-family real estate, then you can choose the best locations. Choosing locations is important because it can decide your success in this business. So, you need to analyze the real estate market and as cited from Mashvisor site, those include the rental demand, optimal rental strategy, future market trends, appreciation rates and other variables.
As explained on the Finance Buzz, there are several factors that you can consider when choosing the location of your real estate so that it will be interesting for prospective tenants to rent it.
Multi-family real estate near school districts can be a good idea because a lot of families want to live in a residence where access to school is easy. Moreover, if the real estate is near schools that have high quality, then you can get long-term tenants.
It is better if your real estate is near some important facilities such as shopping centres, entertainment, and other attractions. It is because those things are usually needed by tenants. So, there is a possibility that your tenants are comfortable living in your real estate. It is not impossible that they can extend their rent.
Facility of Property
Your prospective tenants may be interested in renting your property because there are facilities that they need in your property such as having a fitness room, shared spaces for gathering, etc.
Decide the Number of Units
According to the Fortune Builders site, you need to think about the number of units that you will rent out and if you are a beginner in this business, you can try to find the real estate that focuses on three types of multi-family properties such as duplex, triplex, and four-plex. Why are these types of multi-family properties better for a beginner? It is because these properties can give you the biggest profit with the least risk. Besides, generally those are affordable for beginner investors.
After you find the best locations and even you have found the real estate, then you have to calculate everything so that the rent price that you set is proper and it becomes your income that is worth it. When you think of setting the renting price, you need to calculate the costs of its maintenance and repairs.
Make an Offer to the Chosen Multi-Family Property
You can get help from your agent when making an offer. When it is ready, your agent will meet the seller’s agent and then they will negotiate. If the seller accepts your offer, then you can go to the closing process.
Prepare Your Property
If you have bought the property, before you rent it out, you are able to make some repairs and upgrade. You may be able to paint the walls, replace broken lamps, or change some outdated furniture. It is better for you to do it when there is no one that rents it. If you make some repairs and upgrade when there are tenants who are renting it, it will be more difficult.
Think About The Way to Manage Your Property
After everything is set, now you may be ready to find tenants that will rent your property. However, before you advertise it, you need to think about the way you manage it whether you will manage it by yourself or you will hire someone or even a property management company to do this. Managing here includes collecting the rent and property maintenance.