Have you been looking to get into the world of real estate investing, but you aren’t quite sure where to start? Rental properties have been a staple in investment portfolios due to their consistent monthly income and potential for long-term gains through appreciation. But what often gets overlooked are the advantages of investing in multifamily real estate. Multifamily properties provide even more benefits than single-family investments and their income potential only scales with how many units are included in the property. Continue reading as we explore the basics of multifamily real estate along with how they can help you diversify to build a stronger investment portfolio.
Multifamily homes are classified as any property with two or more separate living units included. From an investment standpoint, they allow you to acquire multiple cash flowing assets in one transaction. This benefit can be a huge boost to the property’s monthly income, but it also means managing multiple rental units. However, managing a multifamily home is generally easier than taking care of the same number of single family properties. It will still be beneficial to understand all the aspects of the rental process. If you don’t have any experience as a landlord, it may be wise to start with managing a single family property before moving on to a larger multifamily investment.
Let’s go over some of the unique benefits multifamily real estate investments provide:
The other major benefit of investing in multifamily homes is how they help diversify your portfolio, leading to more reliable growth over time. The advantages we covered such as having multiple streams of income make them safer investments than most other types of real estate. Branching out into different asset classes is also a good way to spread risk in your portfolio, so consider adding a multifamily investment if you haven’t done so already. And by spreading out your investments across multiple geographical areas, you can build an even stronger portfolio that is resistant to market downturns.
Here are the 3 most important steps to take if you plan to get started with multifamily investing:
Additionally, you will need to decide if you’re going to manage the property yourself or hire a third-party management company. Hiring a property manager is always an option, and it leaves you with more time to focus on other investments, but you’ll need to compare the cost of such services to your bottom line to determine if it’s financially viable.
We also want to provide some tips for how you can mitigate risk and ensure you will have a successful investment. Managing your property means taking proper care of tenants, which is easier if you have a well-developed system in place. Keeping in regular contact with your tenants will show that you’re striving to provide a quality environment, and you should make an effort to address any issues that are brought up quickly.
When the time comes to fill a vacancy, you will want to create a thorough screening process. This usually includes a background check, credit check, and reaching out to the tenant’s previous landlords if possible. Finally, consider purchasing landlord insurance with liability coverage which can pay for the cost of repairs caused by less careful tenants.
The easiest way to save on rental property financing is to find a trusted lender that can get you the best leverages and rates. RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate investors. RCN Capital also has flexible and competitive loan options available. Are you looking to perform renovations on your investment property?