Investing in a multifamily property is a worthwhile decision since it offers a great way to build wealth. I always make it a point to tell my students at my syndication academy that apartment complexes can help secure a passive income. Although they are more expensive compared to single-family properties, multifamily properties appreciate faster and generate greater investment returns.
First-time investors get intimidated at first. The multifamily sector, after all, involves numerous processes before closing a purchase. In my own experience, I have dealt with numerous challenges when I first started forming my first syndication. Financing these investments was not the only issue. I also struggled with the fact that I needed to handle a ton of legal paperwork and conduct due diligence.
Yet, I persisted! So far, my team and I have closed 26 syndications and I have set up academies to help first-time investors such as yourself. So, let me share to you some of the best tips you can apply to succeed as a multifamily property investor.
1. Take action
Indeed, there’s no better time to invest in multifamily properties than now. As apartment complexes continue to thrive in a high growth environment, we are seeing more and more people channeling their wealth towards the multifamily sector.
It’s a seller’s market as you see at this time, but my belief is that you need to double your efforts and stay in touch with your brokers and your investors now more than any other time.
As the market corrects, only if you are actively talking to brokers and giving your criterion; they will funnel good investment opportunities towards you. So, stay in it… and reap the benefits, I know it’s hard!! But don’t get discouraged-remember Commercial Real Investing is a Team Effort and a marathon, not a sprint.
In this sense, it’s best not to get left out. If you want to take advantage of the situation, decide right away.
2. Learn from the masters
Investing in multifamily properties requires a special set of skills. No doubt, these skills are easy to develop if you know where to get them. Usually, it’s not a question of where, but a question of whom.
It’s best to talk to experienced investors and syndicators who have a great track record for many years and who have built strong skills and systems to impart their knowledge to you.
You can search online for podcasts, blogs, and e-books by successful multifamily syndicators. Read all the reviews and talk to some of the students to vet the coaches. If you want extensive knowledge, you can take up online courses. These will teach you everything there is to know about the multifamily industry.
I always say “Syndication of Real Estate” is not a 200 lb. gorilla. It’s not a science and art to understand the concepts. All you need is massively planned actions to achieve the desired level of success. It’s a life changer for the people you help and yourself.
3. Pool enough funds
Because multifamily properties are more expensive, you will need to gather as much cash as possible. For this, purchasing a duplex, 6-unit or 20-unit property is a good start.
You can always form a syndication with people you know are interested in growing their wealth and scale up faster to larger size apartment complexes. The larger sizes definitely are easier to manage and appreciate more.
It’s only a matter of growing your investors base. You can start by encouraging family members and friends to invest their savings in cash and retirement funds through self-directed IRAs, which should be at least 401 (K) to the needed amount for purchasing a multifamily property.
4. Practice effective time management
When it comes down to closing a purchase, it’s important to conduct your end of the due diligence, loan qualification and fulfilling lender inspections. In this sense, you will waste no time in getting the right documents in order. For this, it pays to resolve investor procrastination as this slows down your progress.
As a good rule of thumb, maintain a due diligence checklist to so you can be on top of everything. Moreover, having one professional company to do that saves you a lot of time and allows you to move forward in closing a deal with a seller.
These are only basic tips you need. Want more? Give a comment below and I will definitely give you a tidbit or two about investing in a multifamily property.