What Should You Look For In a Multifamily Investment Property?

February 22, 2018

In Denver and other hot property markets throughout the United States, multifamily properties are a great investment. These properties can yield higher overall revenue than detached homes and are always in demand. They are not as difficult to care for or to fill as conventional commercial properties, and they can often turn a profit at 50% occupancy or less. A multifamily unit rarely sits idle! Still, it is not always easy to select the right multifamily property for your investment portfolio.

When you’re comparing opportunities, keep these factors in mind:

1) Always Start with Location

Location remains a primary concern for multifamily properties, just as it is with single-family residences. Simply, location goes a long way toward determining the renters you can attract. You can always change the property itself, but the location will always be with you! With that in mind, be familiar with nearby employment, educational opportunities, and other amenities.

2) Evaluate Unit Composition

Unit composition – the total number and types of spaces in a property – determines the cash flow you can expect at different occupancy levels. By cross-referencing your units with rent in the local market, you’ll better understand how long it will take to break even on your investment. Combined with insight in the local neighborhood, it will also help you with marketing.

3) Calculate Potential Income

Your margin on any rental property should be enough to offset the financing and then some. You can get off to a good start by looking at similar properties and their per-unit price, but this isn’t the whole story. Potential income should be calculated based on After-Repair Value (ARV), and the cost of any necessary repairs must be included in your financial plan and long-term forecasts.

4) Determine Expenditures

Some properties are easy to maintain and manage, but there’ll always be some level of ongoing expenditure. These costs will eat into your margin and constrain you to a certain occupancy level. The two major concerns here are property taxes, which are ongoing, and repair costs. Those are, no doubt, the biggest in the beginning, but will usually average out to thousands per year.

Unique Properties: The Denver Multifamily Property Brokerage You Can Rely On

When you’re looking for the right investment property for you, partnering with a trusted multifamily housing brokerage firm is essential. Our experts have assisted investors of all sizes and backgrounds to access the Denver commercial real estate market quickly and profitably.

Altogether, we’ve helped investors navigate thousands of successful transactions in and around Denver.

We also maintain a special organization dedicated to multifamily brokerage, combining real estate representation and lending under one roof: Greystone Unique Apartment Group.

To find out more, contact us today.


Featured Image Credit: Monkey Business Images/Shutterstock.com

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