Investing in real estate can offer great returns, if done properly. An excellent way to increase those returns is to get into multiplex properties. While a multiplex property is more work than a standard single-family home, if you find the right building and the right tenants, it can be well worth the effort. Here are a few reasons why it makes sense to invest in multiplex properties and some tips on how to do so successfully:
Why it makes sense
It’s true that owning a multiplex property requires a lot of effort, but that effort is well worth it when you have more sources of income coming in. A multiplex property also helps to build your real estate investment portfolio. Buying multiplex properties is a great step for someone looking to expand their investments and tackle a larger project. This investment offers increased experience, as well as financial gains that can help you pay off the mortgage of the property, as well as helping to pay the mortgage payments on your primary home.
What should you consider when investing in multiplex properties?
Like any investment venture, you need to do your research and know exactly what you’re getting into. Here a few things you should consider before buying a multiplex property:
- Location – Before making any purchases, choose an area first. Become familiar with it, and find out all you can about the amenities it offers. This research can help you determine what kind of tenants you will most likely find there (families, working professionals, retirees etc.)
- Inspection – As with any property, you want to have a professional inspection done. This process becomes even more imperative when multiple spaces are involved. Ensure that all the units meet proper safety standards.
- Potential vs. actual income – What you think you can make from each unit and what you actually willmake can vary. Research what other similar spaces are going for in the area and be realistic when determining what you can charge for each unit.
- Operating expenses – More properties mean increased operating costs. These figures need to be accounted for before purchasing the space. What kind of heating does the place have? Is there A/C? What will the insurance be like? What major renovations or repairs may need to be done in the future? Find out all you can about these costs. This will help when it comes time to make an offer.
Tips for investing in multiplex properties
Here are a few tips to remember when you start looking to invest in multiplex properties.
Take a look at properties that are close to or under market value
Now, this might not work in all locations, but if you do your homework and analyze your options, you may be able to find a property that is currently undervalued. This can be the result of a variety of issues (the property needs renovations, the owner needs to sell quickly, there are currently no tenants etc.) but if you’re committed, you may be able to solve these problems and end up with a great deal.
Add value and curb appeal
You don’t have to be the handiest person when it comes to renovations to boost the value or curb appeal of a property. Simple things like landscaping, a fresh coat of paint or modernizing a space can do wonders. These small updates will increase your chances of finding respectable tenants and increase resale value.
Keep up to date on market trends
Make sure you know what the housing market is like in the area that you’re looking to purchase in and do a lot of research. What are similar places in the area going for? Is it a rent-heavy neighbourhood? Know your real estate market before buying in it. Also, be aware of all the laws, tax rates and regulations associated with making a real estate investment in the area.