You’ve already toyed with real estate investment, you’ve flipped a few houses, or perhaps you have a small portfolio of rental properties, and you’re ready for your next bigger challenge. Have you considered multi-family investment properties?
What are Multi-Family Investment Properties?
A multi-family investment property is a property which will house multiple families. So it might be a large house that can be divided, or already is divided into two or more apartments, or a purpose built block of apartments or condos. Sound intimidating? Well actually multi-family properties can be a very sound investment. Think about it this way, if you can buy a property for $200,000 which is rundown you might be able to sell it for $300,000 once its renovated. But if you can split it into three apartments which sell for $120,000 each then there’s another $60,000 profit to be made.
Or if you want to invest in rental properties if you have multiple apartments in one building your maintenance costs are reduced and you have less chance of there being a month when you have no income from the property. If one of your five apartments is empty for a couple of months you’re still making a profit, but if you only have one then you start worrying.
Locating Ideal Multi-Family Investment Properties
The easiest way to get into multi-family investing is to buy a small built for purpose block of apartments or large home already converted into apartments. You won’t have to apply for planning permissions to change the property and you will probably already have sitting tenants already paying their rent. Once an apartment is vacated you can decorate it, make any changes you think necessary and then rent it out at a higher price.
However, where the real money is to be made in multi-family investment properties is in converting or fully renovating a building. Some blocks of apartments have been neglected by landlords for many years and eventually people have moved out leaving just one or two long term tenants. Buying one of these blocks and spending good money on it to bring it back up to modern standards you can add a lot of value to the property and increase rental yields significantly.
Alternatively, you could buy a large family home that is in an area where rentals are become more common, and convert that home, after apply for planning permissions, into several apartments. Remember that you will need to split the utilities in the building so that each property has its own separate gas, water and electricity supply, and apply to the local authorities for each property to be recognized as its own dwelling. So it might take longer than a usual renovation before you can start to sell or rent out the properties.
So if you’re looking to up your real estate investment game, a multi-family property could be a great next step for you. If you already own a few properties and aren’t sure if you have the funds then why not liquidate a couple of your current properties first.