- August 30, 2018
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Whether you are new to investing in the multifamily real estate market, or you’ve just been out of the game for a while, it’s important to make sure that your investment is a solid one. In order for that to be, there are some necessary questions you will need to ask.
What Exactly is Multifamily Real Estate?
When you think of multifamily real estate, you likely conjure images of an apartment complex, but multifamily can be much more than that. The term multifamily real estate refers to any building where more than one dwelling exists within separate housing units. This could all be within one building, or perhaps these units exist in multiple buildings located on the same property. In addition to apartments, this term may be used to refer to townhomes, duplexes, triplexes, quadraplexes, or retirement communities. Each of these types of dwellings will present a unique set of circumstances to you as an owner or landlord, so get clear on the differences before choosing which type of multifamily is right for you.
Is Multifamily a Good Investment?
The short answer here is yes, though obviously there will be fluctuations in the multifamily real estate sector depending on your local market. Multifamily has seen a huge increase over the course of the past decade, and it shows no sign of stopping anytime soon. What is the reason for this? Well, for one thing, many baby boomers are reaching an age where downsizing is looking more and more appealing. Add to that the millennials that are saturating the market as they come of age. The majority of this younger demographic is in search of experience over stability. This causes them to gravitate towards the shorter lease terms of rentals as opposed to the commitment of home ownership. If these trends continue at the rate they are going, there’s no doubt that your multifamily property will be a profitable investment.
What Makes a Multifamily Property Valuable?
There are a lot of factors that will contribute to the value of your multifamily real estate investment.
- Number of Units: The number of units within your multifamily property will have a direct correlation to its value. The more units, the greater the guarantee that the month to month cash flow from your property will stay relatively consistent. Even if one or two units stand empty for a period of time, it will have far less of an impact if you are collecting rents from 30 units than it will if you are collecting rents from 4. Keep in mind, however, that the greater the units, the more money you will have to set aside in your budget for potential unexpected repairs.
- Location: As with any real estate transaction, the location of your property will always dictate its worth. Multifamily property is typically considered more valuable when it can offer greater convenience to its tenants. This may mean close proximity to nightlife, restaurants, grocery stores, public transportation, and major roadways.
- Amenities: The more amenities your multifamily property offers its tenants, the more you can expect to get on your return (though your initial investment may be more). Part of the appeal of apartment living is having onsite access to pools, gyms, computer labs, et cetera, without the hassle of having to pay additional fees.
How Do I Make Sure I’m Getting a Good Deal?
Your top priority when looking for a multifamily real estate investment property is to ensure that you secure the best deal possible. The easiest way to make sure this happens is to work with a skilled real estate advisor who is a) familiar with your local market and b) well-versed in the niche of multifamily. Remember that the seller has a team looking out for their best interests, and you should to. Your agent will help you to understand the terms of the lease as they are presented by the seller, help to negotiate a better deal by determining where you should concede and where you should ask for changes, and will handle all of the aggravations that may pop up in the process. In short, working with a real estate agent is imperative to making your transaction go as smoothly and effortlessly as possible.
Looking for Multifamily Investment Property in Baton Rouge or the Surrounding Area?
If you’re ready to take the plunge into the multifamily real estate market, there’s no time like the present. At SVN | Graham, Langlois, & Legendre, LLC, our team of dedicated advisors has lined up some of the best multifamily properties that Baton Rouge has to offer. We’re ready to let you in on some of the best kept secrets on the market so that your investment is sure to be a success. Take a look through our database of available properties today and contact us to schedule a walk through.