So, you are seriously researching your first real estate investment in a multi-family property.  Where can you start?

• First and foremost, as you evaluate any property, stand firm on your established ratios for cash flow and profitability.   This includes thoroughly understanding the condition of each property and what costs will be in order to attract the rental income achieving the desired profitability.  If you think a currently under-performing property could meet your criteria with an investment in some upscale improvements and subsequently higher rents, carefully assess the local economy and rental market, as well as the cost estimate from your contractor.

• Start looking in an area with an adequate percentage of renters to homeowners, and an age and lifestyle demographic trending toward a demand for rentals.  And, of course, avoid areas with an over-supply of available apartments and new apartment construction.

• Renters seek properties that are attractive, and especially those that include desirable living features, inside the unit and out.  As you drive into the property assessing first impressions, keep in mind that the fountain out front may attract lookers, but not necessarily renters.  From a quality microwave in the kitchen, to a well-maintained swimming pool, the conveniences of daily living outweigh noticeable but purely cosmetic touches. Genuinely desirable living spaces support a higher level of rents and have less turnover.

• Plan your strategy for property management and how many units you can reasonably handle.  Will you be the one on call 24/7/365, or do you want to hire professional management – and what options does the property’s cash flow allow?   In the next couple of weeks check my upcoming post about managing a multi-family investment property.

• Research may turn up owners of multi-family units who will finance your purchase of their property themselves, or allow you to assume their mortgage.  Next week I’ll be blogging about various financing options, including which owners/sellers may be open to financing the sale themselves.

Meticulous research is needed to help you find successful multi-family projects.  External factors you need to be aware of range from the level of demand and supply in the rental market to the long-range economic prospects for the area.  As you assess individual properties, be conscientious about your criteria for return on capital and monthly cash flow, as well as the tenant base, property condition and much more.  Once you have thoroughly investigated the pros and cons, you may conclude that the consistent cash flow and the returns on an eventual sale make a multi-family property the next direction for you.

What other things do you look out for when investing in multi-family properties?

For more information on how you can escape the rat race for good and create lasting, generational wealth with real estate, download my FREE ebook, “How to Find Underpriced Properties: Secrets for Creating Wealth with Real Estate in ANY Economy.”