Real estate investing is an easy way to generate passive income. However, it isn’t for everyone. Before you purchase a multifamily property, there are a few things you need to know.
Money
Whether this is your first or hundredth real estate investment property, you need to understand economies of scale. The money you spend on the property whether on a single-family dwelling or a multifamily property is not the only cost. If you use a property manager like Steven Taylor landlord, there are costs for having the property managed. Even if you manage the property yourself, there are costs for marketing, repairs and upgrades. Multi-family buildings have better economies of scale than a single-family home. The more units you have, the more uniform the rules and expectations. You can also buy items in bulk when you have multiple properties saving money per item.
Marketing
Like any business venture, a marketing plan needs to be part of your business plan. Having a building you can rent is great, but people need to know about it in order to apply and fill the spaces. Figure out who your target tenant is by conducting market research and then craft a campaign to reach those tenants. A little time and money can fill your units for the most money.
Management
Either you need to manage the property or you need to hire someone to do it for you. Property managers handle the tenant disputes, walk-throughs, rent collection, tenant screening and scheduling repairs. However, a property manager does take some of the profit from the property. That being said, many investors choose to use a property manager especially if they have more than one property because the money is well spent. The owner is no longer responsible for the day-to-day running of the property. Whichever you choose, have an idea before making the purchase, so you can include those costs when evaluating the potential profit.
