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Lessons From Buying Multifamily Property in a New Market

Lessons From Buying Multifamily Property in a New Market


My company’s latest acquisition was an 80-unit apartment complex.

As I walk you through this property, I’m going to go over five lessons I learned from buying this real estate investment.

5 Key Takeaways From Buying Multifamily Real Estate

1. Knowing the Market

This is the first apartment purchase I’ve ever made outside of the city where I live. To get to know the market, I stayed in Airbnbs in this neighborhood to really understand the locals.

I wanted to get a feel for the types of tenants that would be renting from our property. I also wanted to coordinate with local property management companies.

2. Speaking with Property Managers

Once we identified this property, I spoke with property managers about rent pricing. I needed to figure out where the rents for this property were at that time and where they could potentially be if certain renovations were made.

With insight from the property management company, we were able to reverse engineer the purchase price by considering the rents and the renovation costs associated with achieving those rent prices.

Related: How to Buy a Small Multifamily Property: A Step-by-Step Case Study

3. Consider Self-Managing

We initially tried out third-party management of this property, but it didn’t work out. Their quality of work wasn’t up to our standards, and there was a lack of transparency and timeliness.

Fortunately, with this being an 80-unit complex, you get the economies of scale being able to have two people on site. So we decided to part ways and self-manage.

4. Direct to Owner

This property purchase reiterated our stance that going direct to the owner to purchase will remain our go-to method. Right now, trying to find properties that are listed through a broker or a Realtor is just too competitive. We’d rather control our own destiny by going directly to the owner.

5. Be Persistent

It took six touches to get in contact with the actual decision maker of this property. And then, it took multiple follow-ups and months to convert them from being uninterested in selling to interested in selling. So practice persistence!

Those were the biggest lessons I learned through some failures and successes with this multifamily property. Hopefully you can benefit from some of these takeaways!

hard-money-lenders

Do you have any follow-up questions for me about this property? 

Ask away in the comment section below!

 





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