A multi-family residential property is also called a multi-family housing unit. It has many housing units in a single building or a group of buildings. The names of these units depend upon their construction style and the amenities they offer. Major examples are apartment complexes, duplexes, townhomes, triplexes.
Ali Ata – The goal of multi-family properties
Ali Ata from AAIM Development – a leading name in property development in the USA, has invaluable experience in the real estate market of the USA. His company has recently entered into a project for the rehabilitation of a multi-family property in Chicago. According to him, multi-family housing is generally targeted at different markets like luxury renters, affordable housing for college students, and units for residents with a low income. There are specific types of housing that are eligible for government subsidies as well.
Any property with less than four units is considered to be residential property. It is often labeled to be a commercial property. The location of the property determines the rental activity it will get in the future. The number of housing units in the building also determines the type of financing one needs and the rate of returns that one can expect from the building.
Investing in a multi-family property
You first need to search for the right property that aligns with your individual needs. Purchasing a multi-family property is more expensive than single-family homes; however, its benefits are more and worth considering. Here, you should consider your financial goals, its acceptable risks, and the property as a whole.
You should research well in the area and explore the market where you want to buy the property. At the same time, you should compare other properties in the nearby regions. It is prudent to drive around the neighborhood during the day and night to feel how it appears to residents. In short, you must learn as much about the property as you can. This helps you to make wise and informed choices.
You should consult a specialist in the field to get an idea about the local area. Ensure the expert you choose has to experience in multi-family properties. This will stop you from investing your hard-earned money in a costly multi-family home only later to discover the rates of returns you had expected are much lower.
Financial information is vital
Once you have discovered a location that looks promising, you should analyze its financial information. Begin with the revenue and the costs to find out the rate of capitalization. The condition of the property should be noted, the number of present residents and its vacancy rate. With consent, you can go in for rehabilitation projects and improve the value of the property for future tenants as well.
According to Ali Ata, one of the biggest benefits of multi-family properties is you can get increased cash flow every month. This cash flow comes from the tenants in the building. The property management of such buildings is easier than single-family units. One property manager can be hired to effectively manage all the buildings with success.