Looking to invest in a multifamily property? The multifamily investment market is expected to reach $148 billion next year, according to CBRE.
Making the decision to invest in apartment real estate is an easy one. Choosing a property to invest in is the real challenge. So, what makes a good investment property?
LOCATION
You know what they say about real estate – location is everything. That sentiment is true for multifamily investment properties as well.
So, what makes a good location?
HIGH-GROWTH AREAS
Properties in high-growth areas, or areas with a thriving job market and economy, are likely to attract more tenants.
There are several ways to gauge the growth of an area:
Are large companies moving to the area?
What is the local unemployment rate?
What is the state of the housing market? Have prices gone up, or down?
You can also find news articles that list high-growth areas, but bear in mind that these aren’t always reliable. It’s important to investigate each potential location thoroughly before making any real estate investment.
NEIGHBORHOOD
Multifamily properties in popular neighborhoods won’t have a hard time attracting tenants. The neighborhood you choose will determine your vacancy rate and the types of tenants that you will receive.
This factor is just as important as location. It’s important to research the local area thoroughly to ensure that it will be a good fit for your rental plans.
GREAT SCHOOLS
Unless you plan to invest in one-bedroom apartments, there’s a good chance that your tenants will include families with children. When researching properties, make sure that you consider the local schools.
Multifamily properties in areas with great schools will be more attractive to tenants. When it comes time to sell your property in the future, a good school district will help you fetch a higher price.
CRIME RATES
Apartments in low-crime areas will likely attract more tenants. Check with the local police or library to find information about crime rates in nearby neighborhoods. While it’s important to consider all types of crimes, vandalism and property crimes are the most concerning for property owners.
Consider the current crime rate, but also take a look at trends in crime. Is the crime rate going up, is it on the decline, or has it been about the same for years? If crime is on the rise, it may be worth considering a different area.
These are some of the most important factors to consider when gauging a location for investment properties. Location can make or break your investment, so consider it carefully and be thorough with your research.
INCOME POTENTIAL
When researching properties, income potential is crucial. Is there potential for high returns and growth? Does the property have cash flow? How difficult will it be to find tenants? How long will it take to get the property ready for renting? Is there enough demand for rentals to make the property viable?
These are all important questions to consider – and answer – before committing to a property.
COST OF RENOVATIONS
What is the condition of the property? It’s tempting to invest in a fixer-upper, but how much time and money will you have to invest in the property?
Underestimating the cost of renovations can be disastrous for investors, and instead of generating a return, your property will quickly turn into a money pit. When considering costs, make sure that you also take into consideration maintenance and ongoing expenses.
Investing in apartment real estate doesn’t have to be complicated. Contact us today at [website link] to schedule an introductory call and learn more about our real estate investment opportunities.