John D. Rockefeller's words have never been more valid than they are now: "The major fortunes in America have been made in land." Whether you're on your way to becoming wealthy—or are already there—real estate investment is a powerful vehicle to help you reach your destination. As a professional Plymouth multifamily management company, we know that your portfolio makes you an integral part of the Plymouth economy!
- Multifamily real estate investing is an opportunity to get more bang for your buck—as well as gain access to a wider market.
- Owning a multifamily property means that several considerations are consolidated to one central location.
For example, no matter the amount of units, there is only one location that needs landscaping or maintenance. This helps remove unnecessary complications and streamline your business.
Of course, those are just a sample of the benefits that investors can expect from choosing to diversify their portfolio offerings with real estate. Regardless of where you are in your wealth journey, multifamily properties can be a great way to reach your destination! First, it helps to know more about what multifamily ownership can be like—and how to get there.
Find Your First Property
- Generally speaking, multifamily properties are not as easy to locate as single-family ones.
- The first step is to check what is available in the Plymouth area.
- After you locate a few options, it is time to crunch the numbers.
- Delve deep into what it would take to own and maintain the property.
- Compare purchase prices, examine the operating costs, and estimate the potential rental income.
Once you acquire a clear understanding of the costs involved, you can begin to paint a picture of the actual value of a Plymouth multifamily property.
Understanding the Value
An accurate estimation of the true value of any prospective investment depends on a few important numbers. As a Plymouth multifamily management expert, we know this is no less true of multifamily properties! Here is a breakdown of some of the more crucial components:
- Mortgage payment: This is the money paid the lender towards the loan for the property. A portion goes towards the loan balance, and some goes towards interest.
- Down payment: This consists of upfront cash you pay toward the price of the property. With a Federal Housing Administration (FHA) loan, you can get an interest rate as low as 3.5% if you live in one of the units on the property. Other lenders may require between 20 and 25%.
- Estimated rental income: This is a reliable estimate of the income that will come from tenants as they pay their rent each month. Ideally, this number is more than the payment for the monthly mortgage. If so, the lender could view the investment as being less risky.
- Price to Income ratio: This ratio compares the average household price to the average income for a household in a specified area. As it decreases, the price of housing typically shifts to become more affordable.
- Cash flow: This number represents the net income produced by the property you purchase. If there is money left over once you've made expenses and payments, you have a positive cash flow. If there is no money left over, then your cash flow is considered negative.
- Price to Rent ratio: The price to rent ratio helps compare the costs of buying compared to renting in the same geographic area. The equation includes dividing the average home price by the annual rent—on average—in the area.
What to Look for in an Investment
When buying a multifamily property in Plymouth, there are a lot of variables to consider. Just because the price fits your budget doesn’t mean that prospect is the best option! There are some factors that make or break a multifamily investment property.
The first factor to consider is location. This is very important for multifamily investments because you want the property near you, but also want it in a high-yield, high-growth area.
Of course, you can always tackle the first issue when you work with Plymouth multifamily management companies: with professional support, the distance from you to your property is no longer a factor. However, a good location for a potential rental is one in which many people are trying to live. Even if the property needs some work, if it is in a desirable location, it may still be a good buy.
The next factor is the number of units. For a first-time, multifamily investor, it is better to begin with two to four units in order to keep your work as landlord manageable. Starting small allows you more time to get familiar with how everything works. A duplex or four-plex is a great place to start and can provide you the experience necessary to invest in larger properties in the future.
Of course, this is another arena where working with Plymouth multifamily management can be beneficial to you as the investor. A property management company can help you get your property in shape and keep it in shape. Having a responsive team behind you to support tenants, fix problems, and maintain the property is a valuable asset—especially as a first-time multifamily investor. They provide insight into what works and what doesn't and how to keep good tenants in and bad ones out.
Rocket Your Income With Multifamily Properties!
Jumping into the world of multifamily investment is exciting! At first, you may not see Rockefeller money—but with time, as your train of properties grows, your portfolio will gain momentum.
Finding a good location and strong properties is a good start, but it is just the beginning! Take time to do the math and figure out what will be the best financial decision. Of course, professional Plymouth multifamily management can also help you crunch those numbers!
If you're ready to grow—but not sure how to do so—learn more about what multifamily units have to offer your portfolio! You'll quickly see why these lucrative investments can benefit from the right management.