Multifamily properties are an excellent investment for a great variety reasons. They give investors the ability to expand their real estate portfolio very quickly by adding multiple, cash-flowing properties at the same time. They even provide tax benefits for their owners in the form of write-offs and depreciation. However, investing in these properties can also be a complex undertaking. Along with learning how to manage and maintain the property, there are a few things you’ll want to learn to help ensure your investment’s success. In this post, we go over some of these items so that you can run a profitable multifamily property and be a better-informed investor.
It’s a good idea to stay informed on your local market
Doing research on current market trends can help you immensely when it comes to managing your property. Keep an ear to the ground for trends in your local market so that you know when prices are primed to increase or decrease. The market can change over time, and you may find that the rent you were charging a year ago is no longer appropriate. If home pricing has gone up significantly, it might even be in your best interests to sell the property and take in the profits. Spend some time researching the market so you can get the most out of your investment property.
You should perform a cost segregation analysis
There are many tax benefits that come with owning multifamily property. For the most part, you can write off all maintenance and business expenses associated with the property. You can also perform a cost segregation study to take your savings even further. With a cost segregation study, you depreciate all of the assets on a property over the useable lifespan of the asset. Everything from appliances to outdoor upgrades can be depreciated, including the building itself. When done properly, a cost segregation study can save you heaps, even if the property is actually appreciating in value. Consider working with a tax professional to maximize your savings with multifamily real estate.
You can invest in the property to increase your monthly revenue
When it comes to maximizing the income generated by a rental property, there are a few things you can you do. Of course, keeping the units well maintained and being available to your tenants will go a long way in keeping your property occupied. But you can increase the value of units, and in turn their monthly rates, by adding desirable amenities like upgraded appliances and furniture. If a unit ever becomes vacant, you would be wise take this time to renovate the unit and add even more value. Stick to low-cost upgrades with a big impact, like a fresh coat of paint, and focus your attention on high traffic areas like the kitchen, bathrooms, and living rooms.
Professionals are your best bet in times of need
There’s a lot to take care of when it comes to owning a piece of multifamily real estate, so you shouldn’t be afraid to take advantage of professional services. While It’s great if you’re handy and can deal with small issues yourself, complex repairs to plumbing and HVAC systems should be left to the pros. It’s likely these repairs will take longer if you handle them yourself, and you run the risk of causing even more damage if not repaired properly.
In a similar vein, there’s a lot that goes into the day-to-day operation of a large multifamily property. If you find yourself getting overwhelmed, you should consider hiring a full-time property manager. You will effectively be turning the property into a passive income producing asset, but you’ll need to crunch the numbers and decide if it’s worth it for you.
The easiest way to save with your multifamily property 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 purchase or refinance a multifamily real estate property? Connect with us today.