Investing in multi-family real estate properties can be such a lucrative option, especially if such an investment is well-managed. Unfortunately, people investing in multi-family properties often face certain pitfalls that spell doom for their businesses. Here are some of the common mistakes to avoid during such investments in order to increase your chances of success.
One Man Show
Investing in multi-family properties involves a lot of different people and moving pieces. You’ll need a broker to find properties, lenders to finance the deals, an attorney to negotiate contracts, and a mentor to help you wade through it all if you’re new.
Attempting to play all these parts and get everything done yourself is nearly impossible. Even if you could manage it, it’s not a good idea. Find smart and competent people to help you. It will save you money, stress, and so much time in the long run.
Property Before Money
You might have found the perfect property, but do you currently have the funds? If the answer is no, you’ve lost a real shot at securing it. When entering the world of multi-property finance, you quickly learn that to have the money before you go looking for properties is the best way to get what you want and the only way to be able to truly negotiate a deal.
Using Existing Leases
Too many first time multi-family property investors figure that they can use the lease the previous owner conjured up and that everything will be fine. More often than not, doing so leads to trouble, especially if you didn’t take the time to look over it with an attorney. Many leases have an addendum or concessions, and without a trained eye looking over it you may lose money and gain another stress.
Not Knowing Relevant Laws
Multi-family property investing can be even trickier for newbies, as each state and municipality has its own set of laws and regulations regarding landlords and tenants. It can be too easy to break a law without even knowing if you aren’t well versed or guided in the legal side of the industry.
In real estate, it’s all about what you know and who you know. Research is an essential part of the industry and the more knowledge you have, the more successful you will be. Surround yourself with experienced real estate professionals and devote a lot of time to learn the ins and outs of the business. If you’ve put in the time to educate yourself, you’ll be able to steer clear of many common mistakes.