Multifamily Deals: 3 Things You Need to Know

Multifamily deals are a great way to make significant profits, if you find the right one. These kinds of units are becoming more popular, as space is becoming increasingly scarce. Multiple families can stay under one roof in separate apartments, while they share facilities. Thus, multifamily units can be more economical than single-family houses. Of course, there are some things that you should consider before investing in multifamily deals.

The 50% Rule for Multifamily Deals

When investing in these types of dwellings, it is common not to have all of the information initially. To offset this, you can apply the 50% formula when looking for multifamily deals. This formula stipulates that in a typical neighborhood, your expenses will be about 50% of your total income. Thus, you can assume this is the case if other data is not available. Another good rule of thumb is to overestimate your expenses. There are nearly always expenses that you do not expect.

Use the Letter of Intent

The letter of intent is a formal legal document that outlines your official interest in the property. This letter will save you a lot of time, as there is a lot of work involved in researching multifamily deals. Additionally, when you start investing in multifamily deals, it might be a better idea to start with smaller units. Keep it simple when you begin, and do not bite off more than you can chew.

Off-Market Multifamily Deals

Generally, brokers will have a lot of these multifamily deals on offer. But if you really want to find the best ones, look for those that are off the market. It might take a little digging on your end, but these deals exist. Find a good deal and contact the owners. You can actually find owner information through public records. Additionally, most people have Linkedin and Facebook profiles these days. If all else fails, contact your local real estate agent for the best multifamily deals.