Whether you are a seasoned multifamily real estate investor or have just stepped into the world of property dealing, eventually, your long-term goal would be to have a stable source of passive income while enjoying the benefits of multifamily properties.
Reality Check: Multifamily investment is more than just buying a property. It’s about analyzing deals, understanding the market, and planning for the future.
However, we don’t want you to fall into analysis paralysis. To be clear, we don’t mean that finding a property or cutting a good deal is difficult. We simply mean that there are approaches you can use to facilitate your first multifamily real estate investment.
In this article, we will be discussing the three expert-recommended strategies to leap into multifamily investment. Let’s take a look!
Owner-Occupancy
Purchasing a multifamily property and living in one of the units is one of the easiest strategies to leap into multifamily investment. This works great in two cases; you are a first-time investor, and the property has 2 to 4 units. Moreover, owner-occupancy also gives you the leverage to sign up for FHA loans, requiring a 3.5% down payment. However, make a note that the FHA loan agreement requires you to live at least one year in your multifamily real estate property.
Owner-occupancy is also the best way to gain hands-on experience on how to manage a multi-room property. However, when sharing the same unit or building with your tenant, one important thing to be mindful of is that you both should create mutual boundaries and respect each other’s privacy while abiding by all applicable local ordinances and housing laws.
Join a Real Estate Syndication
If you are a first-time investor and are only planning to enjoy the benefits of investing in multifamily real estate while remaining a silent partner, join a real estate syndication. In simpler terms, a real estate syndication is basically a group of investors who pool together their capital to collectively purchase a larger multifamily real estate property.
Being the ideal source of passive income, a real estate syndication is a worry-free investment as the sponsor spearheads, or the syndicate will be responsible for managing all aspects of the property. While all you need to do is sit back and enjoy the profits and perks. This will save your time as you no longer need to deal with the drama of the tenants or search “How-to” videos every time there is a request for maintenance. Another great benefit of partnering up with syndication is that you will get the best multifamily investment deals as the sponsor will do all the research to find the most profitable investment opportunity.
Get into a Partnership
If you are eager to start investing in multifamily real estate, but capital, experience, or finding a good deal are the factors that are holding you back, take our advice and get into a partnership. A partner will play the role of the missing piece in your multifamily investment puzzle. This means that, for example, if you need capital, find a partner who is willing to loan you cash in exchange for solid returns. On the flip side, if you lack experience or knowledge of the real estate world, find a partner who has a good understanding and profitable record in multifamily real estate.
In all cases, make sure to create a partnership that mutually benefits and protects the interest of both parties. When signing a formal partnership, ensure to document everything and decide the following:
What will be the roles of all the involved parties?
What will be the equity split?
Financial responsibility.
How will you take key decisions?
Even if you and your partner agree on a fifty-fifty partnership, one thing that we would like to highlight here is that it won’t always be that way. Though a harsh reality, there will be times when you will feel like you are the only one doing the heavy lifting. Therefore, in all cases, your priority should be creating a multifamily real estate partnership with open communication.
Wrapping It Up!
Are you planning to step into the world of multifamily real estate investment? If so, the aforementioned strategies to leap into multifamily investment have got you covered. Implement these tried-and-tested tactics in order to begin a lucrative career in the world of multifamily investment.
If you are interested in discussing Real Estate and MultiFamily Strategies, Please contact us at info@relequity.com.