If you’ve gotten serious about real estate investing but willing to forgo the services of a real estate professional to help you locate multifamily properties, preferring instead to locate properties worth the investment on your own, fair enough.
In this article, I want to discuss how you can locate multifamily rental properties on your own including some Do’s and Don’ts that might help you along the way.
1) Don’t drive around the area expecting to see For Sale signs posted on any multifamily property. Whether it’s a single-family residence, duplex, triplex, or large apartment complex, owners are very shy about letting their tenants know that the property is for sale and almost never post a sign. In fact, you will seldom see a For Sale sign on multifamily investment properties.
2) Look for multifamily properties that are currently for sale in your local newspaper or online on Craig’s List then contact the owner, ask for the address and drive by. If the property is of interest contact the owner again and ask for a marketing package or whatever other document the owner has prepared to present the property. If you are still interested, set a time with the owner to walk the property and perhaps see inside a couple of units.
3) At any time when you have an occasion to walk around a multifamily property that is for sale, it is best not to talk with the tenants. But under no circumstances ever disclose to a tenant or onsite manager that the rental property is for sale and you are considering buying it. Owners are always reluctant for tenants to know the property is being sold for fear that tenants will move out. In this case, loose lips really can sink ships. An upset owner may decide to not to sell the rental property to you, or may even pull the property off the market just to prove to his tenants that it is not for sale.
4) Look for problem properties. In this case, a multifamily property that’s been neglected or has higher-than-normal vacancies is not necessarily a bad real estate investment, but poorly maintained and managed buildings could be an indication that the owner might consider selling. You’ll have to drive around your area and look. If you locate what appears to be a problem property, get the owners name from the recorded deed at the county tax assessor’s office.
5) Attend courthouse sales of properties being sold by lending institutions as a foreclosure. Foreclosure properties can be tricky, though. If you are a beginning real estate investor, you should avoid this type of investment. You do not want to risk losing money on a multifamily property the first couple of times you make an investment.
Okay, now we come to the most important real estate investing question. How do you determine whether a rental property is profitable? Perhaps you located several multifamily properties for sale, how do you know which is the better investment? There is only one-way, folks.
You have to run the numbers using your own homemade spreadsheet or a good real estate investment software solution. And unless you understand all the nuances of real estate investing and have the time and confidence to include them into a spreadsheet correctly, buy a real estate investment software solution. Professionally developed software automatically computes the cash flows, rates of return, and profitability measures you are going to need for a prudent rental property analysis and investment decision. You will find it well worth the small investment.
Here’s to your success.