Choose a Property Type
Doubtless, the first thing to truly understand with regards to multi-family rental properties is the two crucial classifications. Multi-family buildings with four or fewer units are identified as residential properties, while a property with more than four units is mostly known as commercial. In quite a lot of ways, the size of the multi-family property you endeavor to procure will determine how you search for, assess, and price it. Multi-family properties with four or fewer units are, more often than not, financed with residential mortgages, just the same as buying single-family properties.
But take heed, commercial property is purchased with commercial debt and priced based on a value formula, not comparable properties. Buying a commercial property endows quite a tricky challenge for anyone who hasn’t gone through the process before, so a lot of rental property owners first settle upon smaller multi-family properties.
More Units = More Preparation
Even if you decide to go for it and buy a multi-family property with four or fewer units, more preparation will be needed than purchasing single-family rentals. As an instance, location is absolutely a significant part of any outstandingly profitable rental. But on the other hand, for multi-family properties, location can be even more than vital, especially the property’s proximity to public transit or other amenities. It’s, in like manner, important to fully look into the area’s cost of living, crime rate, and average income level.
Notwithstanding that looking up numbers online can be useful, they don’t always tell the whole story. This is even more so true in areas that have experienced recent changes (either positive or negative). Coupled with your other research, afford the time to drive through the neighborhood and stop by the local police department to get a more extensive knowledge and picture of the area.
Prepare Your Finances
Before you start your property search, it’s really important to look into lenders and get your finances in order. Providing what type of property you would like to purchase, single out a lender with a reputation for helping investors purchase that particular property type. You will equally need to prepare documents supporting your creditworthiness, for instance, income and expense statements from your current rental properties. There may be documents or information needed to qualify for a loan on a multi-family property that you wouldn’t need on a single-family property, so be ready to give additional documents when required.
Hire the Right People
In a vast number of ways, efficiently scaling up to multi-family properties depends largely on having the perfect fit of dependable professionals on your team. Case in point, you’ll have to find and employ a real estate agent with suitable knowledge and experience. If you possibly can, opt for one specializing in the type of multi-family property you plan to purchase. You may particularly want to gain the local expertise of a professional Columbia Heights property management company, for instance, Real Property Management DC Metro. As a local market expert, we add significant value to the purchase process and throughout the length of your property ownership.
Are you ready and anxious to get started? Contact us online to learn more about our many useful quality services.