05/18/2022
Are you ready to take your real estate portfolio to the next level? If so, you should seriously consider adding a multifamily property to your single-family resume. Here are some quick tips to help get you started.
1️⃣ First and foremost, you'll want to estimate how much rental income a specific property can generate from and compare it to the potential operating expenses. The difference between the two is your net operating income (NOI).
2️⃣ Next, subtract the property's monthly mortgage from its NOI to get your cash flow estimate. In other words, how much money you can expect to actually put into your wallet each month.
3️⃣ Calculating the cap rate will answer the question of how it would take for you to see a return on your investment. While the cap rate for a “safe” investment falls between 1-2%, ideally, you'll want it to be in the 5-10% range.
4️⃣ While there are no hard and fast formulas to help you figure out the best physical locations to invest in, it might be smart to focus your search on the high-growth, high-yield areas close to where people work, shop, or go to school.
5️⃣ You'll also want to consider the total number of units on the property, including the number of rooms in each unit. Duplexes, triplexes, and fourplexes offer the most upside with the least risk for beginner investors and are generally more affordable.
6️⃣ Finally, the purchase price can vary greatly depending on the seller and their motivation so you'll want to do some research to find out who you're dealing with and why they're selling the property.
And when the time comes to secure financing, LendSimpli will be there to help you find a loan that best fits your needs and guide you through the entire home buying process.
