Why Investing in Small Multi-Family Properties Is A Smart Deal.
Are you looking forward to invest in real estate? Investing in multi-family properties is one of the most powerful investment strategies you can use to create long-term and consistent passive cash flow month after month. Therefore,
The main advantage of choosing this type of investment is the fact that you don’t need a huge investment to start. You can even start with owner occupied small 2-4 multi-family property and grow your investments over time.
The following are some of the benefits of investing in small multi-family properties:
- 1. You can use your monthly cash flow to pay the property’s mortgage
- 2. Lenders typically offer more favorable loan interest rates to those purchasing a primary residence.
- 3.Property management is easy because it’s all under one roof
- 4. Investing in small multi-family properties can act as a gateway to bigger real estateinvesting opportunities such as house hacking and BRRRR (Buy, Rehab, Rent, Refinance & Repeat).
- 5. Investors enjoy huge tax benefits
- 6. Hedging against Depreciation
- 7. Forced Appreciation benefits, sweat equity, living flipBRRRR InvestingThe concept of BRRRR investing is also used small multi-family properties and it implies the below real estate investing processes and cycle;
- R– Rehab
- R-Repeat (the process)
How Do We Find A Cash Flowing Multi-Family Property In A Hot Market?
The Worcester and Fall River real estate market is still hot and competitive and getting a cash flowing multi- family property in easier than you think. Are you still looking for a Cash Flowing property in Boston, Dorchester, Quincy, Chelsea or Watertown? Or is it time to look at Gateway Cities to start your journey faster?
There are a number of strategies that you can apply to get better off-market deals. They include:
- 1. Driving for dollars**
- 2. Getting the list of key properties that you should target (You start by choosing yourproperty criteria first and then you use the resources)3. Use of investor friendly realtor to get an absentee owner list or owner occupied multi-family property
- 4. Working with county tax department to get tax delinquent list
- 5. Working with county courthouse to get probate list
- 6. Melissadata.com; Listsource.com where you can buy any kind of list; USleadlist.com; PropStream; Skip Tracing: VA & Fiverr to get the numbers fast; Speed Dialer ( Magic) : Mojo, REDX, Velocify, CallTools
The smart concept here is to build a wholesaler’s team: teach them how to make money and they will definitely bring you big deals. Brilliant.
Will Rental Properties Perform In The Next 6 Months As Usual During And After COVID?
In respect to the current economic situation, some will probably not. As many of you might be aware, the housing eviction moratorium has now gone into effect.
How Long Will The Housing Moratorium Last?
Essentially, until 45 days after the Governor lifts the state of emergency. At the moment, no one really knows whether it will be full or partial lifting. It’s also important to note that the Governor also closed all schools for the remainder of the school calendar year.
Until the 45 days are over, we cannot give a conclusive state of the housing moratorium.
What Is Covered By The Housing Moratorium?
The housing moratorium basically covers everything except “essential” or “cause” evictions that may impact on the health and safety. Therefore, it may probably cover for drug dealings in the building, firearms and others. What am not sure if it will cover is noise complaints.
Can I Send Out Notices To Quit For Non-Payment Of Rent?
At this time NO! If you do that, it will be constructed as a 93A matter and it might subject you to significant damages. In fact, you are not allowed to even send anything which suggests to the tenant that they have to move or that they lease period is over.
I Already Have An Execution, Can I Proceed?
No. You will have to wait until the moratorium is over.
I Do Not Have The Money To Do Repairs, Am I Still Obligated If A Tenant Does Not Pay Rent?
Yes, you are still obligated even if the tenant is not paying rent.
How Is The Housing Court Going To Handle Cases When This Is Over?
The court is constantly working on contingency plans to help the flow of cases. Actually, I will be attending a presentation by court officials next week on some of these issues and I will update you further on this matter.
So, How Do You Buy Today And 6 Months From Now During Uncertain Time?
All you need to do is to calculate your risk. When you buy at a greater discount, you can get about 60-70% of the value.
You can also double your due-diligence on the property performance and tenant’s status with regard to their jobs. Also, buy as if you were only collecting 50% of rent for the next 6 months only.
Will It Sustain Carrying Costs, Debt Services And Economic Vacancy?
Currently, there is no more consistent investment than real estate. It’s given the time to react, and unlike stocks, when downturn happens, because real estate offers multiple exist strategies.
Always remember what Robert Kiyosaki, a real estate investment guru said on matters real estate investing. He said “Real estate investing, even on a very small scale, remains a tried and true means of building an individual’s cash flow and wealth”.