Purchasing a multifamily property as an investment can be a great move. Multifamily properties provide a great return on investment and have many advantages over renting out a single-family home. As with any investment decision there are some things to consider before committing to purchasing multifamily property.
Are there improvements that can be made?
When looking for the multifamily property you wish to purchase pay attention to things that can be done to improve the property. One improvement that will pay for itself quickly is a laundry room if there are enough units to support having one. This is a relatively easy improvement that can enhance your tenants living experience immensely. You will also want to make sure that the property is in good condition and that you will not have to pour more money than you are ready to right away.
As with any rental property, there are tax advantages and disadvantages when it comes to renting out multifamily property. Make sure you consult with your tax advisor before jumping in to anything.
Selecting a good location is important both because the location will often determine sales price as well as market rent, but also its proximity to you may be a factor. Depending on how you choose to manage the property, whether it is easy for you to get to may be very important. If you decide to manage it yourself, you will need to be able to address tenant requests promptly. This may be difficult if the right location is not chosen. If you are going to have a property manager handle issues then location may not be as impactful with regards to where you are but it will make a difference across state lines. If you know of a property manager from the state in which you live, but your desired property is in another state, you may need to find a new property manager if your current manager is not licensed in that state.
How will it be managed?
Considering location and how the property will be managed can sometimes be closely linked. If you choose to manage a multifamily property yourself, you will need to be sure that you have the availability to address concerns promptly. While managing a multifamily property is relatively easier than many single family homes, it can still be demanding due to the higher number of units and tenants that must be dealt with. You will also need to fill vacancies yourself and process eviction paperwork yourself. If you choose a property manager, check out the article on what to look for in a property manager.
Lisamarie Wand is experienced in property management and commercial real estate and can be contacted here if you have questions about purchasing or managing multifamily property in Nevada.