Multi-unit real estate investing is an excellent way to get started in building your wealth. Even a small multifamily property can quickly bring in a good profit if you play your cards right. In this article, we’ll go over how to pick the right location for your multi-family living property.
When you’re looking for a property to invest in, you’ll want to make a detailed analysis of the listing before getting in too deep. You’ll need a good cash flow to make this beneficial, so number-crunching is an important first step, i.e. calculating the amount of money the rent brings in, the number of expenses you’ll have, etc. Here’s how to break it down:
- Figure out the number of units you’ll be able to rent out. How much can you charge for rent in each unit?
- Multiply the total rental income by 50% for the number of expenses you’ll have to cover for the upkeep
- Consider what the mortgage will be at several price points since you’re not sure how much you’ll be able to buy the property for.
- Once you have the cost of the mortgage and expenses, add that together and subtract it from the total cash flow you’ll receive from rent.
Now that you know if the property will actually be profitable for you or not, there are more elements to consider. First is location. The location of the property is crucial to determining the future value and the ease at which you’ll be able to rent out space. The best locations are cities that have a growing population with a shortage of housing. This will drive up the cost of living and allow you to charge more for rent. Fort Worth, Texas is a good example of a promising market for multi-family real estate investment.
Another great way to determine if you’ve found a good location is if there are universities or booming businesses in the area. Colleges and companies will bring more people to the area, and these people will have a stable income driving economic growth. Raleigh, North Carolina is an excellent choice for both colleges and steady businesses.
Another tip when looking for a multi-family real estate location is to find a listing that needs a little work on the curb appeal. This will keep competition (and the price) down so you can get a good deal on the investment. If the work is mostly cosmetic, it won’t cost much to give the property a facelift and attract residents.
No matter the area you choose for your multi-unit real estate investing, you’ll be wise to install a security system fit for the environment. Pro-Vigil Surveillance systems offer superior safety for multi-family units and give 24/7 monitoring. Learn more about our system today.