If you want to succeed in the real estate game, make sure you save this multifamily investing checklist. Whenever you’ll be assessing a deal, pull it out and make sure you’ve checked off all the boxes.
Ultimate Multifamily Investing Checklist
First off, I want you to forget about investing in single-family homes. When I say property size, I’m talking about apartment buildings.
Now, I want you to aim for 16 or more units. Why?
Because the number of units equals your protection. And the more units you have, the more protection you get
When you first visit the property, you should be in love with the location.
If you don’t get the gut feeling of this is the one as soon as you step into the building, then go look somewhere else.
That ain’t the right deal.
It goes without saying that you should be cash flow positive.
More specifically, you need to figure out if it’ll be cash flow positive without improvements at 4% to 6% on cash invested.
Yes, you heard that right — debt is important if you want to succeed in real estate.
So, use debt on your first deal, but no more than 75%.
When hiring your manager, you need to be as careful and wise as possible.
Your property needs an active, enthusiastic, and detail-oriented manager for long-term success.
6Renovation and repair budgets
For upgrades and renovations, set aside about $250 to $350/unit/year.
Also, have all obvious repair costs for the next 36 months in reserve.
7Rent increase potential
To keep that cash flow strong, you have to assess the potential for rent to keep going up.
You should be looking at a $25/$50/$75 rent increase potential — at least.
When it comes to loan underwriting, it’s best to outsource it.
Have it done by a third party without the influence of your opinion.
Take a look at your market.
Now, zoom in on the cost per door of expenses on the property — excluding taxes.
Don’t jump into the first apartment deal you see, especially if you’re a beginner.
Walk and create folders on at least 25 deals before you buy the first one.
So there you have it, this is the multifamily investing checklist I would follow if I were to start all over again.
If everything is a go, buy the deal. And If you don’t want the deal, call me.