Have you considered purchasing a multi-family building?

With all of the foreclosures and short sales that have happened over the past few years, the need for living in an apartment is growing. These are people who not only want to rent an apartment, but have no other choice. As a result of losing their jobs or their homes, they no longer qualify to purchase a home.

So how do you get started? And?how do you determine what you are qualified to borrow? The most important thing to find is a real estate professional familiar with selling and purchasing multi-family units.

Remember, the real estate agent selling the multi-family building represents the seller?s best interest and not yours. You need to have an agent representing you and your interests in the purchase. You are not paying the commission on the purchase, the seller is. It is to your advantage to have an agent on your side of the transaction.

If you are purchasing 4 units or less, then a conventional loan can be obtained to finance the purchase. This means you can finance the loan over a period of 30 years. You will also need a down payment of 20 ? 25%. You should also expect that the longest term you will find is a 7-year fixed with a 30-year amortization.

You need to have an agent that is able to assist you in determining if the deal will be profitable and what your cash flow will be before and after your mortgage debt. This means your agent needs to be knowledgeable about the Debt Service Coverage, Cap rates (capitalization rate) and Internal Rates of Return. Here are some additional tips on your investment property purchase.

Think Long Term. It is important in this economic state that you think of this investment as a long term one. Buying investment property to make repairs and flip could very well be a risky plan. Think about keeping it for at least five years or longer.

Location. Just as you do when purchasing your personal home, a great location is crucial. You location alone can almost guarantee that your property will have very little vacancy, and if a vacancy occurs, the unit will be rented quickly.

Consider the services of a property manager. It may be easier to turn the management over to a professional management firm. If you want to circumvent the hassles of managing a property, be sure to add the expense of a professional manager into your calculations before you decide to buy a property.

Giles & Company, Inc. is an independent, full-service real estate office working with both commercial and residential real estate, leasing and property management. Please call 760-746-1234 with your questions. We are located at 1882A West El Norte Parkway, Escondido, CA 92026 in the Country Club Plaza next to 7-Eleven and Cenote Grill.

Source: http://www.cherriegiles.com/blog/have-you-considered-purchasing-a-multi-family-building/?utm_source=rss&utm_medium=rss&utm_campaign=have-you-considered-purchasing-a-multi-family-building

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