How to Find Multifamily Property to Buy - Some Do"s and Don"ts
Although I typically encourage new real estate investors to use the services of a qualified investment property real estate agent, if you've gotten serious about real estate investing but have decided to forgo the services of a real estate professional and prefer to locate multifamily properties on your own, fair enough.
But realize that you are more apt to be successful if you understand some Do's and Don'ts about multifamily rental properties as well as knowing where to look to find the deals and what to look for.
1) DO NOT plan to drive around expecting to see "For Sale" signs posted on rental properties. In most cases, 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, other than in some very rare instances, you will not see a For Sale sign on multifamily investment properties.
2) DO look for multifamily properties that are currently for sale in your local newspaper or online on Craig's List. If a particular property appeals to you, contact the owner, ask for the address, and drive by. If you like what you see, contact the owner again and ask for a marketing package or whatever other document the owner has prepared to market the property. Afterward, if the numbers look favorable, set a time with the owner to walk the property and perhaps see inside a couple of units.
3) When you have an occasion to walk around a multifamily property that is for sale, DO NOT approach the tenants and discuss your intentions. Under no circumstances ever disclose to a tenant or on-site 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. If you tell tenants that the landlord might be selling, it will probably upset the tenants and in turn upset the owner. And in this case, the 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) DO drive around your area and look for problem properties. 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) DO attend courthouse sales of properties being sold by lending institutions as a foreclosure, but bear in mind foreclosure properties can be tricky. If you are a beginning real estate investor, you should learn as much as you can about this process before you make 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.
6) DO be able to run your own numbers. The last thing you want to depend upon is a number that someone else says is profitable. Unless you understand all the nuances of real estate investing and have the time and confidence to create your own spreadsheet, buy a real estate investment software solution. You will find it well worth the small investment.
But realize that you are more apt to be successful if you understand some Do's and Don'ts about multifamily rental properties as well as knowing where to look to find the deals and what to look for.
1) DO NOT plan to drive around expecting to see "For Sale" signs posted on rental properties. In most cases, 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, other than in some very rare instances, you will not see a For Sale sign on multifamily investment properties.
2) DO look for multifamily properties that are currently for sale in your local newspaper or online on Craig's List. If a particular property appeals to you, contact the owner, ask for the address, and drive by. If you like what you see, contact the owner again and ask for a marketing package or whatever other document the owner has prepared to market the property. Afterward, if the numbers look favorable, set a time with the owner to walk the property and perhaps see inside a couple of units.
3) When you have an occasion to walk around a multifamily property that is for sale, DO NOT approach the tenants and discuss your intentions. Under no circumstances ever disclose to a tenant or on-site 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. If you tell tenants that the landlord might be selling, it will probably upset the tenants and in turn upset the owner. And in this case, the 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) DO drive around your area and look for problem properties. 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) DO attend courthouse sales of properties being sold by lending institutions as a foreclosure, but bear in mind foreclosure properties can be tricky. If you are a beginning real estate investor, you should learn as much as you can about this process before you make 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.
6) DO be able to run your own numbers. The last thing you want to depend upon is a number that someone else says is profitable. Unless you understand all the nuances of real estate investing and have the time and confidence to create your own spreadsheet, buy a real estate investment software solution. You will find it well worth the small investment.
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