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INVESTMENT PROPERTIES

People ask me all the time if they should invest in Multi-Family Properties. If you’re one of them, my answer is ABSOLUTELY… but only if it fits your Investor Identity. The truth is though, that it has to be right for you. To help you understand that part, you first need to understand the many benefits.

Investing in multi-family properties is one of the most powerful investment strategies you can use to create astounding and consistent cashflow month after month. 

BENIFITS OF REAL ESTATE INVESTING

MONTHLY CASH FLOW

Provides a unique cash flow investment opportunity into single-family rental homes where the primary return on investment comes from tenants paying rent.

EQUITY GROWTH

Properties where the monthly rent is at least 1% of the purchase price. With these properties, you can build equity on your investment property without paying a monthly mortgage payment.

APPRECIATION

Identifying the right properties that have growth potential because of under market rent rolls. These properties would gain equity simply by brining the rent into fair market value.

1 - 4 FAMILY UNITS

Financing for 2-4 unit investment properties can be extremely appealing because they fall under residential lending guidelines, just like a single family. These properties are even approved for FHA financing, with as little as 5% down is easily accessible. You have to reside on the property to qualify but the rents from the other units would pay for your mortgage leaving you a rent free residence. Determining value on these homes are based on the comparative model to determine value but you will need to learn the income model as well to assure the investment works for you.

5 - 40 Unit Buildings

Any multifamily property with 5 or more units will be viewed as business property, and thusly, is esteemed in light of the wage it produces. This basic change from 1-4 unit structures gives the speculator the capacity to raise the estimation of the property by expanding wage or diminishing costs. These types of investments require 65-75% LTV meaning larger down payments are required. 

THE SIX TYPES OF COMMERCIAL PROPERTY

OFFICE BUILDINGS:

This category includes single-tenant properties, small professional office buildings, downtown skyscrapers, and everything in between.

RETAIL/RESTAURANT:

This category includes pad sites on highway frontages, single tenant retail buildings, small neighborhood shopping centers, larger centers with grocery store anchor tenants, "power centers" with large anchor stores such as Best Buy, PetSmart, OfficeMax, and so on even regional and outlet malls.

INDUSTRIAL:

This category ranges from smaller properties, often called "Flex" or "R&D" properties, to larger office service or office warehouse properties to the very large "big box" industrial properties. An important, defining characteristic of industrial space is Clear Height. Clear height is the actual height, to the bottom of the steel girders in the interior of the building. This might be 14–16 feet for smaller properties, and 40+ feet for larger properties. We also consider the type and number of docks that the property has. These can be Grade Level, where the parking lot and the warehouse floor are on the same level, to semi-dock height at 24 inches, which is the height of a pickup truck or delivery truck, or a full-dock at 48 inches which is semi-truck height. Some buildings may even have a rail spur for train cars to load and unload.

OFFICE BUILDINGS:

This category includes single-tenant properties, small professional office buildings, downtown skyscrapers, and everything in between.

MULTI-FAMILY:

This category includes apartment complexes or high-rise apartment buildings. Generally, anything larger than a fourplex is considered commercial real estate.

LAND:

This category includes investment properties on undeveloped, raw, rural land in the path of future development. Or, infill land with an urban area, pad sites, and more.

MISC:

This catch all category would include any other nonresidential properties such as hotel, hospitality, medical, and self-storage developments, as well as many more

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