So another person asks me to help
them analyze multi family deals for free.
“I am new to multifamily and would like to find a mentor to help
me in this journey. Specifically, I would like a mentor who can walk me through
a deal, answers questions, and teach me the ins and outs of multifamily. I am
not a complete “noob” as I have experience in single family and have read
several books on multifamily. I am looking for a two hour-ish session where we
walk through a deal, answer questions, and get a deeper understanding on the
subject.”
With the real estate bug biting, and
the allure of passive income from rental properties is whispering sweet
nothings in your ear. But before you jump headfirst into that fixer-upper
frenzy, take a deep breath and equip yourself with some knowledge. Because in
the world of real estate investing, not everything that glitters is gold (or a
guaranteed steady stream of cash).
I will help you but no one
is going to give you two hours for reviewing many deals free. I will give you
free advise but I need you to do the initial research. Also need to know what
your financial situation really is: FICO middle, how much cash you have in
checking/savings/what your w-2 income is/what your personal housing payments
are/ car and student loans and credit card totals. Then I know if you can carry
something on your own. Also how many deals you closed, how long, and what you
hold as rentals today.
If you have a deal to
review- send me the address, rents, the survey you did on comps and rent
survey, demographics of the location. 1. So you find an address. 2. look on
Zillow for similar square footage closed properties, call a local CRE agent to
give you a comp, determine square footage/lot size/room counts 3. go on
government census numbers to see the demographics of block/ crime stats/ median
income number 4. see if you can determine who employers are for this subject
location. The first couple will be difficult to compile the numbers fast. I
have digital tools that I pay for plus ones that look at the roof in live time,
so my stats research is faster and may skew different. Once you have the
details of who your tenant is for this location, we can do a zoom call or phone
and I will show you how to dig further. After you do 100 of them you will get
faster at determining which ones are worth the time to research and see where
you might invest. Are you planning on doing this locally or remote? What are
your construction skill sets? If going remote you need a team of boots on the ground
that's the second step.
Fear not,!
This is your roadmap to navigating the sometimes-treacherous terrain of
property investment. We'll break down the key factors to consider when
evaluating a potential money-maker, so you can distinguish the diamond in the
rough from the money pit in disguise.
1. Location, Location, Location: It's a cliché for a reason! Research the neighborhood
thoroughly. Is it bustling with young professionals or retirees seeking peace
and quiet? Are there desirable amenities nearby? What's the crime rate like? A
thriving area with high demand for rentals translates to higher occupancy rates
and potentially higher rents.
2. Crunch the Numbers: Don't be afraid to get nerdy with your finances. Calculate the
estimated purchase price, closing costs, renovation costs (if any), property
taxes, insurance, and potential rental income. Then, factor in vacancy periods
and maintenance costs. Can you cover all the expenses and still turn a profit?
Tools like the "1% rule" and "cap rate" can help with this
initial assessment.
3. Condition Counts:
Inspect the property with a critical eye (or bring along a trusted expert). Is
it structurally sound? Are there major repairs looming? Remember, even cosmetic
fixes can eat into your profits. Prioritize properties that require minimal
work and renovations.
4. Future Forecast:
Think beyond the present. Is the neighborhood likely to experience long-term
growth? Are there any planned developments that could affect property values?
Research zoning regulations and future development plans to avoid any nasty
surprises down the line.
5. Don't Go Solo:
Surround yourself with a team of trusted professionals. A good real estate
agent, mortgage broker, and property manager can be invaluable assets, saving
you time, money, and headaches.
Bonus Tip: Emotion
can cloud judgment. Don't fall in love with a charming fixer-upper before
considering its financial viability. Stick to your investment criteria and make
decisions based on cold, hard facts.
Remember,
real estate investing, like any investment, comes with risks. But by doing your
due diligence, researching thoroughly, and making informed decisions, you can
increase your chances of landing a property that's not just a pretty face, but
a true financial asset. Happy house hunting!
P.S. Share
your own real estate investment tips and experiences in the comments below!
Let's build a community of savvy property sleuths.
