4-28-17

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Real Estate Journal — Spring Preview —April 28 - May 11, 2017 — 13C

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By Anthony Diaz, NAI Summit Benefits of investing in Multifamily Properties

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ultifamily invest- ments seem to be attractive for many

participating in the process and increasing value unlike the stock market which is more passive with no control on your part. There is also the develop- ment side. Acquiring income producing properties, which might be slow at first, will provide you with a steady source of income. With multi- family there is an economy of scale or more “bang for your buck” because of their mul- tiple units and the more units the more potential for income. Regardless of which strategy you use there are some things that you should know. Financing. This is another great benefit of investing in Multifamily. It is easier to get a loan from the bank in mul- tifamily then other commer- cial properties. Even easier then single family homes. For many who have invested in single family homes this might come as a “shocker” especially when more units typically means more money,

however banks like multifam- ily because the properties typically generate consistent strong cash flow every month even though there can be vacancies every month, un- like single family homes. So if you have a 10 unit complex or a hundred, if 10% vacate there is still cash flow that is coming in and the chances of foreclosure is less then single family homes where 100% is vacant. Banks are all about risk and this is why they like multifamily. The good news for the owner is that banks might even offer more com- petitive rates for this type of commercial property invest- ment then other types of real estate. Also contrary to what people might think, acquir- ing larger units is easier and more time efficient. If you have a 20 unit complex, you collect rent from one location rather than 20 and only have to go to one place to fix the issue rather than multiple sites. You have a loan for

only one place, inspections for one place, etc. It is just time efficient. However, since this is the case and it seems like owning more units is better than less what I have found is finding these larger units, 50 – 500 plus, is difficult to find because of their attrac- tion. And once the owners seem to get these large units they tend to hold the proper- ties for very long periods of time because of the previous mentioned advantages. You can all look to generate other income by adding a coin operated Laundry room that is clean and well lit. Perhaps charge for parking if you have extra space and park- ing is difficult in your area. In larger facilities there are many other amenities that you can charge to make extra money or use to retain renters such as gyms, pools or tennis courts. For many cities you are helping the city by pro- viding safe, clean affordable housing for people who might

not be able to afford their own home. So look for grants that some cites provide to offset some upfront cost you might have. And remember it is a business and you have depreciation and expenses that you can deduct. A tip for many looking for this type of asset is to not only look at the MLS but commercial property sites like Loopnet which is for commercial properties only, and multifamily is considered commercial property. Lastly consult a broker. There are many deals that happen with- out the property even being listed or is what we call off market properties. So in closing as you can see multifamily should not be over looked. You can own an asset that helps with reces- sionary times, where there are more buyers and sellers with an asset class that will always be in demand. Anthony Diaz is an as- sistant vice president at NAI Summit. n .

reasons. The entry point dollar wise is less ex- pensive then let’s say in- dustrial. It seems to be r e c e s s i o n p r o o f b e -

Anthony Diaz

cause people will always need a place to live unlike, office, retail or industrial which might not be a priority when the economy slows, or might be eliminated during recessionary times. There are more buyers than sellers in multifamily. Even though not simple, many investors see it as an alternative to the stock market and a step up from rental properties. Also many like to actively participate in the properties not only for buying and selling but fixing the properties so that the owner has an active role in

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