Whether you’re a seasoned investor or just getting started in the real estate market, there are a variety of strategies for investing in multifamily units. From improving your return to giving back to the community, there are many ways to enjoy the benefits of owning a property that can also help you save money in the long run. A multi-family unit is one of the most affordable ways to own real estate. The better your investment, the more you’ll likely save on your monthly housing expense and the longer you’ll own your unit.
Here, experienced investor Raphael Toledano will give you a few tips for investing in multi-family properties.
Research is key
One of the most important things you can do is research your prospective investment. Raphael Toledano suggests taking the time to go beyond just looking at units in the area and actually meeting the tenants. Although you don’t have to be an expert to do this, good research will give you a good understanding of the demographics and rental situations in the neighborhood. Researching the neighborhood will also let you know if there are any community issues that might affect your investment.
Communicate with tenants and your investment manager
One of the best ways to get a feel for tenants’ needs and desires is to communicate with them. Make sure you get in touch with the tenants through your real estate agent, or even better, talk to them over the phone. Make sure to ask your tenants what their goals are in owning their unit. Discussing your investment and its progress will also let you know if they have any concerns or questions. You can also arrange to meet with potential tenants to take a look at their apartments.
Avoid debt
Debt is bad news, whether you’re an investor or a borrower. It can either send you into debt for years or leave you with a bad credit rating if you can’t pay off the loan. According to Raphael Toledano, the best way to avoid debt is to refinance your mortgage or find a home equity loan that can be paid off over time. If you choose to borrow, find a loan that’s as close to a no-interest loan as possible, and under which you won’t pay any interest. Even if you don’t have the cash to refinance or borrow, you can always pay your bills with a credit card. Credit card companies typically give you a low-interest rate, so it’s probably better than having a no-interest loan.
Find the right location
One of the most important things you can do when looking at locations for your unit is to choose a neighborhood with a good mix of both young and old people. Raphael Toledano, who is one of the greatest landlords in Brooklyn, indicates that this choice will help you keep your property values up, while still maintaining a nice social atmosphere. Avoid neighborhoods with an almost completely young population, as this could turn into an almost entirely young rental situation over time. The best neighborhoods have a nice balance between old and young people, so your property will be able to grow with the community over time.
Look into financing options
One of the best ways to look into financing options for your unit is to bring a real estate agent or loan underwriter into the equation. Raphael Toledano points out that this will allow you to ask questions about the financing process, get a feel for what kind of loan you might be able to acquire, and see what kind of interest rate you’d be able to get on the loan. This might be a good option if you’re not very familiar with mortgage or loan terms. Another way to look into financing options is to bring in a loan underwriter. This kind of underwriting will give you a better sense of what your cash-out value will be if you were to refinance, and what your loan would cost at a given interest rate.
Conclusion
Owning a multi-family unit is a great way to save money in real estate. Not only do you get to enjoy the benefits of owning real estate without having to worry about monthly costs, but you also get to enjoy a healthier property value. Raphael Toledano (follow him on Instagram) who owns a number of multi-family homes in Brooklyn points out that the best multi-family units will have healthy rental yields, while also having a good amount of equity to help pay off your mortgage or mortgage-free purchase. These will be great investments over time.