COVID-19, which reared its ugly head in early 2020, will have detrimental effects on both the global and domestic economy. Certainly, this can be discouraging for future investors; however, now that we’re in isolation and practicing social distancing, what better time than the present to educate yourself on making the jump from single-family investing to multi-family investing?
While you typically have to invest less money when purchasing single-family homes, you can make significantly more passive income by investing in a multi-family property. Moreover, while multi-family investing may seem risky to novice investors, multifamily properties typically provide more stable income when compared with single-family homes.
Overall, investing in multi-family properties can be lucrative if you are diligent and have researched your possibilities. While the process may seem scary at first, merely taking the first step by deciding to enter this investing vehicle opens up a myriad of opportunities. Here, I will present some tips on how to transition from single-family investing to multi-family investing.
EDUCATE YOURSELF
The first step to transitioning from single-family investing to multi-family investing is to get educated about the process. There are many different investment terms and ideas that multi-family real estate investors should be familiar with to make educated investment decisions
EXPLORE THE MARKET
Once you have reached the point where you feel like you are thoroughly educated about multi-family properties, you can begin exploring properties in your desired market. Using your experience and education, you should evaluate multiple apartment buildings, specifically their finances. This starts with their potential income, and expenses you will incur.
EXPLORE THE MARKET
Once you have reached the point where you feel like you are thoroughly educated about multi-family properties, you can begin exploring properties in your desired market. Using your experience and education, you should evaluate multiple apartment buildings, specifically their finances. This starts with their potential income, and expenses you will incur.
INFRASTRUCTURE AND MANAGEMENT
Arguably, the real work of real estate investing begins after you purchase the property. Specifically, when you buy your first multi-family property, you will have to maintain and manage the property. As such, you must ensure that you have laid the proper infrastructure for your real estate company.
CONTINUE TO GROW RELATIONSHIPS
Real estate investing is about relationships. People are your most valuable resource in real estate. The more of them you know and have relationships with, the better the chances of finding excellent properties to purchase or buyers for your properties. Ask people for their names. Know the right people. This includes investors, managers, and real estate agents who typically have the inside tips on new investment opportunities.
JUST DO IT!
At some point, you will reach the point where you have learned and researched enough information about multi-family investing. You can read every blog article, investment or trade magazine, and may still not be ready to invest mentally. However, while the process seems scary at first, you just have to take the first step on the journey to successful multi-family investing.
If uncomfortable, start small and then grow – this could be 5 or 10 units. Eventually, you can build your way up to larger apartment complexes, where sheer scale improves your returns. This could be achieved by using 1031 exchanges, which is a way to defer capital gain taxes on properties. This is a smart and popular way for investors to build up their portfolio. It can also be done by partnering with other investors through Joint Ventures or Syndications.