Multi-Family Real Estate Investment Tips for the Beginner

Investing in real estate has long since been known as the surefire vehicle to wealth. Unfortunately, the ready cash or stellar credit needed to buy and sell a parcel quickly is not available to the average investor and to this end a new practice has sprung up: multi-family real estate rental investing.

The investor becomes landlord and real estate shareholder in one. As an added bonus, if the savvy investor chooses to occupy one of the apartments, her or his mortgage payment may quite possibly be defrayed by the rental payments of the other tenants.

Yet before you are led to believe that this form of investment is simple, keep in mind that pitfalls are lurking just out of sight with any kind of rental situation! For the fearless and determined investor, here are some multi-family real estate investment tips for the beginner:

Multi-family rental success with rental agreements

Investment success in this venue is determined not by looks and some pretty shrubbery in front of the building but instead by cold hard figures, such as rental agreements dating back at least five years. What you want to see are turnover numbers - how often was an apartment vacant - and also the length of time that it stood vacant. Sellers all too often claim that their properties are much sought after and renting them is a snap, yet if you find that a unit stood vacant for about three to six months, then there might be a problem.

Multi-family rental cash flow

When looking at multi-family real estate for the sake of investment, consider the benefit of the steady cash flow. All too often you might be tempted to take the money and reinvest it into the property to spruce it up and perhaps then raise the rents. This is a common mistake which should be avoided. Instead, use any profits you receive and invest them toward purchasing more multi-family rental properties or in the alternative other investments you might have had your eye on.

Where to look for Multi-Family investments

Realize the potential of increasing equities if you invest in up and coming neighborhoods. While today the area may still look a bit tough around the edges, closely monitoring the big investment firms will tip you off to which neighborhoods may be considered up and coming. Capitalize on the research done by them and purchase rental property there. As the neighborhood improves and property values go up, you will see your investment increase in value as well.

Multi-famil investment management companies

Consider hiring a management company for the daily chores. While it will be a bit of an expense, the luxury of not having to deal with broken toilets after midnight or evictions is well worth the fee!

One of the most overlooked benefits of starting out your real estate investment career as a landlord is the vast plethora of people skills you will develop. Dealing with tenants - even if you hire a management company - not only hones your ability to read people but also enables you to understand the individuals' needs who are renting. This comes in handy for future transactions!