Avoid These 5 Pitfalls in Multifamily Investing

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Avoid These 5 Pitfalls in Multifamily Investing

• Investing in a commercial multifamily property
  can be an exciting opportunity with promising
  results. In the right market, it can be a
  goldmine, but there are five common mistakes that
  keep investors from maximizing the return on
  their investment. Do you know how to identify
  and avoid these pitfalls before they hit your
  pocketbook? Here are some tips we think you will
  find invaluable.
• 1. Underestimating the Cost of Turning Units
• Even if a multifamily commercial property is
  occupied, you may be forced to turn the units
  sooner rather than later. The cost of this is
  often much higher than anticipated. When
  considering a property, factor in the worst-case
  scenario of turnover costs.

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2. Overestimating Tax Deductions and
Credits Investment properties are typically
subject to harsh and complex tax regulations.
There are some deductions that can ease the
burden, but too often buyers overestimate these
deductions and wind up paying more in taxes than
they ever anticipated. It is essential to be
realistic and conservative in your calculations.
Always consider the possibility that you will
have to pay more! 3. Buying in an Problematic
Area The financial upside of a commercial
multifamily unit often depends on its location.
The popular real estate phrase, Location,
location, location! is tried and true.
Familiarize yourself with each neighborhoods
apartment vacancy rates, marketability and
current values, including the market value and
sales/closing changes over the past year. Even
if average rents show a promising future, the
rental opportunities in an area may be in a
decline.
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4. Disregarding Current Residents Owners may
make concessions to tenants such as reduced rents
or free utilities. Prospective multifamily unit
buyers should be aware of such offers, and factor
them into their projected income and profits.
Buyers should also take in to account plans for
handling current tenants, and what costs might be
required to effect these plans. 5. Neglecting
Important Research Find out why the current
owner is selling? Have there been recent changes
(declines) in the propertys cash flow? In the
general rental units in the area? Are there
major renovations or mechanical/structural
replacements needed? Before considering a
property, these kinds of questions must be
answered. Getting answers and ensuring that your
investment will be successful requires more than
an inspection by a qualified property inspector.
You should gather as much information as possible
before making any verbal commitment or signing
any papers. Article Resource
https//bmfcap.com/avoid-these-5-pitfalls-in-multi
family-investing/