Even if there is a slowdown in the number of foreclosure, there are still short sale and foreclosures that are happening which means that there are still an increasing number of renters. This is a silver lining for those multifamily real estate owners which is also considered by a lot of investors as a sector that has developing interests.
So why is it good to invest in multifamily investment? Aside from the normal benefits like keeping up with inflation, cash flow, tax benefits, or equity appreciations, the investment in apartment building has really low risk compared to other commercial real estates. Any person actually needs a place to live in. That is why during the tough times in the economy, you can lower the rent in order for you to fill up some vacancies. But in the other commercial real estate properties like office building and shopping centers, there are only a little businesses that are planning to expand or start during the tough economic times like today. You will still have a hard time filling up your vacant space even if you will lower down the rent.
There are some important factors that you need to consider when it comes to multifamily real estate investments such as the condition, location, rental revenue, and the cost of the property. For instance, in regards to the location, you might want to look for an area that can provide a higher return of investment or you might also want to look into areas that have stable rental markets or a stable neighborhood if you are a conservative investor. Among the main factors that you need to look into is the historical and actual expenses and rental. You also need to know how much is your net operating income and your cash on cash return which are important factors in multifamily investment. The most important factor when it comes to evaluating the long term performance of the multifamily investment is the cash on cash return. The cash on cash return is the annual net cash flow of the multifamily investment divided by the net investment.
The other main financial factors in multifamily investment are the mortgage/loan, closing costs, and down-payment. If ever you do not have the money for the multifamily investment, you need to look for a financing option. Banks and lenders usually ask for a 30 percent down payment. The lenders will also know the amount of the multifamily construction loans by getting the actual net operating income of the real estate property and its debt coverage service ratio.
The first thing that you need to do if you are planning to invest in a multifamily real estate property is to contact a good real estate agent. A qualified commercial real estate agent will help you know the right multifamily investment, get the income and expenses of the real estate property, and will help you in the escrow process and negotiation. Find out more here: https://en.wikipedia.org/wiki/Commercial_mortgage.
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