Real estate entrepreneur Grant Cardone owns 4,000 apartments, and he is an inspiration to many in the business.
While not everyone can be as successful as Grant, you can still become a real estate investor. If you’re in the process of purchasing your first investment property, there are a few things you should keep in mind.
Read on to learn about these things to consider before investing in multi-unit housing.
1. Location, Location, Location
If you’re in the process of investing in an apartment building, the first thing you need to consider is the location of the property. To attract tenants, you need to consider what the neighborhood has to offer.
You should start by looking at the schools nearby, shops, restaurants, etc. Also, do your due diligence to look at the crime rate because many neighborhoods are up and coming, research new construction and opportunities in the area.
2. Set Property Condition Expectations
When looking for an investment property, it’s important to set expectations early on. Depending on your remodeling budget, you will either look for a fixer-upper or a building in near perfect condition.
Before you start looking at potential properties, you need to set the bottom line when it comes to repairs.
If your budget mostly includes cosmetic repairs, don’t buy a building that needs a new roof.
3. What Are Your Rent and Lease Expectations?
Other things to consider before buying a multi-unit building are rent and leases. As a larger building landlord, you will rely on cash flow to make mortgage payments, repairs, and possibly invest in other properties.
Because cash flow is so important, you need to look at comparable rents in the area you plan to invest in. Getting an idea of what people expect to pay in rent for similar units will help you calculate how much you expect to make.
4. Research Tenant Demographics
Learn who is your target demographic early on, so you can properly cater to future tenants. For example, if you’re near the business center of the city or a university, chances are you will cater to a younger demographic.
If the building is in a suburban area near parks and schools, you will cater to families or older couples.
5. Consider New Construction
If you don’t want to invest in an older building because you fear it will be a money pit, new construction might be the answer.
With new construction, you will have the option of making all of the important decisions early on, such as flooring, finishes, and more. For example, you can consult with Solid Power Inc. for all of the electrical options.
New construction is perfect for investors who are perfectionists and pay great attention to detail. These investors want to create a brand with their multi-unit building development.
Are You Ready to Invest in Multi-Unit Housing?
Now that you know the factors to consider when investing in multi-unit housing, you can decide if this investment is right for you.
Before you decide to purchase an apartment building, you should consider the location, tenant demographics, building condition, rent prices.
If you enjoyed these real estate tips and would like to learn more, check out the rest of our blog.