Before you get started with a multifamily purchase, it is a good idea to do your homework…. You don’t want surprises. Research the location of the purchase to find out how much rent you will receive? Find out how hot the rental market is in the area you are considering. Will there be multiple buyers competing for the property? If so, think about your tolerance and strategize with your realtor. Ask your realtor for a market analysis of the property. This will help you determine the most you should pay. Always have an inspection of the property to be aware of any deficiencies.
Ask your realtor if it is typical for sellers to pay buyers closing costs. If so, you want to take advantage of this but if not, plan on additional closing costs.
You also might want to think about purchasing in the spring and summer to allow enough time to find tenants if the property is in an area that attracts families with children that will want to find housing prior to school starting in September.
Finally, not everyone is cut out to be a landlord. Figure out before you get started if you will be hiring a property manager or if you will be finding the tenants yourself. I recommend starting with a property manager. You also need to decide how you will handle any repairs that come up. Are you OK with a tenant calling after hours wanting you to repair a broken dishwasher, or would you rather the property manager be the contact for your tenants. This service comes at a cost, but allows a more stress free investment.
Planning helps take the stress out of the purchase and helps reduce costs. Getting started as an investor is exciting and is also an excellent strategy to build wealth!
Cathy Wahlin – Broker
Windermere Real Estate/PSK Inc