Multifamily properties head the list of popular real estate sectors for investors today. A growing number of real estate investing (REI) enthusiasts are realizing the valuable benefits of investing in this asset class. The lucrative benefits include high yields and attractive cash flow.
In order to locate the best deals, you need to know where to look and the right sources to contact. You also must be willing to perform your due diligence to determine the ideal property investments for you and the best people in the industry to work with.
On-Market and Off-Market Investment Opportunities
You also need to determine whether you want to invest in on-market or off-market properties as a new multifamily property investor.
On-Market Multifamily Property Deals
On-market multifamily properties are currently listed with a real estate broker or agent. The market for these properties is extremely active and competitive today. U.S. property investors and international buyers are eager to acquire available properties, which continues to boost property prices.
For this reason, it is wise to let a broker or agent do all of the heavy lifting for you. Although working with them can be expensive, these real estate professionals locate deals, negotiate transactions and handle all of the necessary steps up to and including the closing. Make a point of staying in touch with your broker for tips and information about ideal future multifamily property investments as well.
The familiar 80/20 business rule applies strongly here. Frequently, 20 percent of brokers handle 80 percent of the current real estate deals in all market sectors. Yet it is still a good idea to focus on the remaining 80 percent who are handling 20 percent of available deals. All of these brokers can make important connections for you to enhance your investment opportunities and options.
Off-Market Multifamily REI Opportunities
If you want to be proactive, you can scout out your own multifamily properties that are off-market, or not currently listed for sale on the real estate market. The best way to proceed is to contact property owners directly. After locating properties with good investing potential, search public records for information about the owners.
Then Google the person’s or company’s name that is listed as the property owner. You can also check sources like Manta or the Better Business Bureau to locate owners and contact data. Searching these owners on social media networks can also be helpful in locating and contacting them.
You may need to analyze quite a few properties to find 8 to 10 that you want to bid on. You are likely to eventually close on at least one of these properties. Yet all of your work will be well worth the effort to acquire a single valuable investment property.
Tried and True Strategies for Finding Multifamily Property Investment Deals
Recommended strategies for locating attractive multifamily property investing deals include the following:
- Select Your Multifamily Property Type and Your Investing Strategy
You can make your investment choice from a few different types of multifamily properties. These property types include duplexes, which can be a good investment for new investors who like the idea of managing two properties that are located beside one another. Any tenant issues like repairs or structural renovations will be similar for the two residences, and both tenants will pay equal rental fees.
You may also decide to invest in a large apartment building or complex. In these buildings’ individual units, the rent is calculated according to the unit’s square footage plus the number of bedrooms and baths and any added amenities. As landlord, you can engage the services of a property manager to operate the building for you.
You may also opt for fixing and flipping this large multifamily property for immediate profit. Ultimately, you will select the property that best aligns with your long-term investing objectives and goals. Prior to purchasing a property, you will consider its profit-making potential and decide whether it fits into your overall property investing plan.
- Do Quality Research to Locate Good Leads
Even if you already know what type of multifamily property you want to invest in and the locale where you want your investment property to be, you may be unsure of how to locate your ideal investing deal. Although the MLS property listings are comprehensive and commonly used to locate available properties for sale, all investors have access to these same listings.
One alternative method for finding less prominent property listings is to review available rental units in a neighborhood or locale where you wish to invest. Good choices are buildings that look somewhat neglected and list low rental rates for units.
This may indicate that the landlord lacks the funds necessary for maintaining the building. It may also be a sign that the landlord is eager to sell the property and transfer the responsibility of repairing and maintaining it to a new owner.
Digital property listings of multifamily properties for sale are also quite helpful in locating your ideal investment options. Online sources like Crexi and LoopNet offer quality listings of available multifamily commercial properties.
Also, popular websites such as Redfin, Trulia and Zillow provide apps for sending the appropriate properties to your phone in real-time for smaller multifamily properties that accommodate two to four different households.
- Team Up With a Realtor
Realtors know the market well and have networks of real estate industry connections. When you form a working relationship with a Realtor who handles multifamily property sales in a locale where you want to invest, you can often view properties as soon as they are placed on the market.
This type of alliance can enable you to build a strong property investment portfolio. It can also help you arrange off-market deals that will have fewer potential buyers as your competitors. Yet before you contact realtors who you have an interest in working with, ensure that you have an engaging, updated website that represents you as a valid and serious property investor.
- Network Online and Offline
Joining a landlord group or association in your city, town or region once you purchase a multifamily building or complex is helpful. These groups hold regular meetings where you can network and meet other property owners. You may even meet the owner/landlord of a multi-unit building who is currently looking for a buyer for this property.
Social media platforms also offer opportunities to network with other property investors and real estate owners. You will find numerous REI groups on these social media sites. By joining these groups, you can network and gain valuable leads. You can also meet experienced investors who can give you excellent advice concerning investing in multifamily commercial real estate.
- Obtain Funding
It can be very upsetting if you locate the perfect multi-unit property to invest in, but you are unable to get the necessary funding in time to purchase the property. Deals in this type of real estate investing typically move quickly, so you need to have funding lined up ahead of time.
Whether you are aligned with a commercial REI funder or obtain funding from a rental loan agent, a bank, a hard money lender or a private REI lender, make sure that you have funding available before you find that perfect property investing deal.
- Use the Direct Mail Method
You can also send information to multi-unit property owners by direct mail. You can research and compile or purchase lists of these property owners and their contact details. Although you will most likely receive only a few responses from each of your direct mail campaigns, a lucrative jewel of a property deal may result from your efforts.
Build Your Authority as a Multifamily Property Syndicator
By creating a quality local Meetup group, a YouTube channel or an REI podcast, you can attract multifamily property deals. You can also build and develop your authority as the leading organizer and sponsor for a real estate syndicate offering multifamily commercial property investing deals.
Other like-minded investors will see you as a knowledgeable, experienced and proactive investor. This type of exposure and communication with other investors and other members of the real estate industry can build and enhance your credibility and trustworthiness as the sponsor (general partner) of large multi-unit property investment deals.
When they learn that you are the sponsor of attractive syndication property deals, other investors will want to participate in your deals as passive investors (limited partners) who join together to supply funding for these property investing deals.
Concluding Thoughts
Investing in multifamily commercial real estate today is extremely popular, and it can be quite lucrative for well-informed and savvy investors. To find your ideal investment deals, you must know where to look and the best sources to contact. You must also perform some due diligence on locales in which you would like to invest and the types of multi-unit properties available in these locations.
You must also decide whether you want to start investing in on-market or off-market property deals. Next, you need to decide on your investment strategy and perform quality research to locate good leads. If you like, you can team up with a Realtor, or you can network online and offline with property owners and other investors.
You can also use the direct mail method to contact property owners and gain new leads. Before initiating any property deal, you must have sufficient funding lined up. In order to organize your own syndication property deals, you can build your authority as a multifamily property syndicator. Ideal ways to develop your authority are creating a local REI Meetup group, a YouTube channel or an REI podcast.
As you gain interested followers, you will also attract passive investors as limited partners. These limited partners combine their financial resources to fund your syndication deals while you handle all other aspects of each multifamily property investment transaction.