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A Beginner’s Guide to Investing in Multifamily Real Estate

Real estate investment has emerged as a safe and profitable vehicle in the past few years. In the US, 89% of investors are interested in putting their money into real estate. If this statistic has sparked your interest to start investing in real estate, we have something interesting to share with you.

Besides being a safe and profitable investment, it is easy to grab real estate properties and also offers wide asset class diversity. You can invest in residential, commercial, industrial, and hotel properties without hassles.

Most beginner real estate investors are drawn to investing in residential properties, especially multifamily housing. Why? The millennials dominate the rental market. Since most of them are now moving to cities for work and looking for an affordable housing solution, they prefer renting a unit in a multifamily space to a single-family property.

Here are some more of the reasons why they are considering multifamily housing:

–          Low maintenance

–          Wellness-centric communities

–          Affordable living experience

–      Necessities in close proximity

–           Sustainable housing solutions

These reasons increase the probability of more millennial renters choosing multifamily housing, creating a lucrative investment opportunity for first-time real estate investors.

If you have decided to invest in real estate, here is your ultimate guide.

What to Look for When Investing in Multifamily Homes?

Investing in multifamily housing needs you to dive deeper into it to understand what will help you earn more profits. This includes finding a property below market value, analyzing and assessing its financial sensibility, and comparing purchase prices, short and long-term costs, and rental estimates. 

Before making a multifamily investment deal, you should consider this checklist to make things easier to understand. 

  1. Location

Location plays a vital role when you’re planning to invest in real estate. A property in a prime location will be more appealing to modern renters. So, it is crucial to look for areas with good growth potential, are in demand, have a well-maintained neighbourhood and yield better profit. 

  1. Rental Income

Before investing in multifamily housing, you must assess the rental income. It is essential to gauge that you earn a profit compared to what you’ve invested. This will help you predict what the future of your investment will be like and help you make a more informed decision.

  1. Number of units

Evaluating the multifamily property as a whole highly impacts your investment decision. You must consider the number of units on the property and the number of rooms it has. As a first-time investor, you must focus on three types of properties i.e. duplex, triplex, and four-plex units. Investing in these properties during the initial phase helps you earn a good ROI with low risks. 

How to invest in multifamily homes?

Real estate investment is excellent, but how do you get started for real? There are three ways to invest in real estate through multifamily properties.

  1. Invest through rent

This is the most common and safe way to invest in multifamily homes. You can choose to put a part of the property you are living in for rent or a property you own and don’t live in. It can be a good source of income that will help you earn a good profit and help you with your loan instalments for any other property you’ve recently invested in. 

  1. Invest through REIT

If you want to take a more structured approach, you may want to consider Real estate investment trusts. REITs are companies that own commercial real estate properties like hotels, offices, malls, and apartments. Investing through REIT means investing in shares of these companies on a stock exchange without as many risks as directly owning a real estate property.

  1. Invest through Funds

In this type of real estate investment, sector funds provide capital to real estate companies to develop a property. If the sector grows and earns good profit, the investors also earn a share of the profits made.

Depending on your goals of investing in real estate properties and the duration you’re planning to invest, you can select one way that works best for you.

Now is the time to invest in multifamily properties!

Multifamily homes are becoming popular, especially among Millenials and GenZ. These homes offer a cost-effective way of living with numerous amenities that help millennials to have a lifestyle that provides comfort and convenience and does not want them to compromise on their living standards. 

Homz Fund offers you a real estate investment opportunity that is backed by the US treasury bond with capital protection. It is developing wellness-centric multifamily housing across suburbs of the US and offers attractive returns on your capital.

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