Whether you have just recently purchased your very first rental property investment or are a seasoned investor in the world of real estate, it’s a strong time for the market. If you’re in multi-family real estate, financial trends for investors are looking even better in the long term.
But if you’re considering getting into multifamily real estate or a savvy investor looking to expand your portfolio, you probably have questions. How should I best invest my money in the current multifamily market? What trends should I be aware of? Where do I get started?
Axela Management specializes in managing expansive multifamily properties, and are intimately familiar with the challenges in these investments. We’ve got you covered with the information you need to know before investing in multifamily in the current market.
Understanding Multifamily Real Estate
Large apartment complexes are the most common type of multifamily property that people think of when they hear the term. It is important to understand however that the property type is more diverse than this. Multifamily simply means that the property can hold more than one household on the premises. This means that you can also invest in condominiums or townhouses to get into multifamily investing.
The financial benefits of multifamily investment far outweigh that of single family when it comes to residential real estate. Just the sheer amount of tenants that one apartment complex can hold gives you much higher income potential. You also gain less income risk from turnover, higher tenant demand, and financial resiliency in the face of things like recession.
Financing Options for Multifamily Investments
When considering financing options for larger investments like this, you of course have the standard options of mortgaging and commercial loans. One benefit unique to multifamily properties however is the availability of government backed property loans like Fannie Mae or Freddie Mac.
These government agencies lend debt capital with the goal of providing stability to the housing market. Investors in multifamily properties in particular are able to reap the benefits of these loans as one of their target sectors of housing. This means you have more options for financing and can typically work out better interest rates even if it comes with higher principal.
Due Diligence and Property Analysis
Some investors can only look at a few promising factors and be sold on a property being a great investment, only to find issues later. You don’t want to be one of those investors. Protect your wallet by being thorough with a full property inspection. A larger property is going to have more places for potential concerns that you want to be aware of.
Similarly, it’s also important to be thorough in your financial evaluation of a property. Potential returns are your biggest concern. You can also study tenant leases and rental history to gather trends on occupancy. Even better, have a property manager run a rental analysis for you to evaluate competitive rental rates for the area.
Mitigating Risks and Challenges
When you do find the right investment, it’s going to come with its share of risks that every rental property has. Overcoming and avoiding these risks comes with how you prepare for them. Damage from tenants and damage from natural causes are the biggest factors towards lowering the value of your property.
Tenant screening is a big part of protecting your property. You need a thoroughly vetted process that ensures you land quality tenants. The right insurance coverage is also important. You also might consider requiring renter’s insurance as this protects your tenants as well. Hiring a property manager can help secure all these processes for your property.
Developing and Executing Your Investment Strategy
When developing a plan for how you’ll invest your money, have a clear goal in mind for the property. Do you just want stable, consistent monthly income? Do you want to grow the property in order to sell for a substantial profit? Do you want to use the profits from the income to grow your real estate portfolio? Once you have a clear goal in mind, you’re ready to develop a plan.
From there, it’s all about execution. Find a property with the right location and potential earnings to make the gains you want to see. Work with your team or advisors to land the right financing options. Prepare and renovate the property as needed to attract enough tenants to fill your occupancy. Also, have a property management plan to retain those tenants and keep a steady flow of income on your rental.
As far as the last part goes, no one can manage a large multifamily property on their own. That’s why our biggest suggestion for long term success is to hire a property management company. A team with a proven track record of success can keep your tenants happy and your property running smoothly.
When you have a lot of tenants and a larger property, managing maintenance, rent payments, and bookkeeping can quickly become exhausting. That’s why a property management company with experience in substantial multifamily homes is best. That’s how you achieve growth in your wealth and can expand your investment portfolio with multifamily real estate.
Multifamily Investment Experts
If you’re planning on investing in multifamily property or already investing and want an upgrade to how your properties are managed, we can help. Whether it’s New York or you’re investing in another state, we’re able to meet you where you are and help you achieve your goals.
Axela Management is a property management company with a commitment to earning trust with the property owners we work with every day. We come with a proven track record of success in multifamily property management and will keep you informed every step of the way. Our portfolio is diverse and we will bring the highest level of detail to however you need us to manage on your behalf.
Reach out to our team today for a consultation to get started on the road to achieving more with your investment.
