The Benefits of Multi-Family Real Estate

If you are interested in investing in real estate, there are many ways to get started.  One of the best is multi-family real estate. What is that exactly?

Multi-family properties are the industry's way of saying rental-housing properties with a number of different units, such as apartments or town houses.  Multi-family real estate also includes mobile home parks, group student housing, nursing homes, and other group living scenarios.

Location is a top priority when it comes to multi-family real estate.  Is the neighborhood safe & secure?  What does it have to offer homeowners or tenants?  Easy access to shopping, transportation, schools, etc.?  How does your property compare to others a potential tenant might choose? 

You also must carefully analyze the general market characteristics when deciding on location.  Look at the demographics of the area, vacancy trends, population & job growth, the median income, the median house price and the economy in general.  Are people moving into the area or away from it?

Always keep in mind that increasing rents and cash flow are key to your success.  Consider the expected rent growth of the property over time.  For example, if you want to buy and hold a multi-family property for cash flow, you need to increase rents to offset higher expenses and hopefully increase your cash flow.  This higher cash flow also increases the value of the property when you sell.  

Unless you're an experienced investor, make sure the properties you purchase are cash flow positive right from the beginning.  If you have a multi family unit of eight units for example, it is not likely that all of the units would be vacant at the same time.  In fact, a unit that is vacant for a short period of time is not likely to put you into a negative cash flow on the whole property.  Leave the turnaround projects to investors who already have some multi-family experience.