The Multi-Family Home Stepping Stone


For those looking to get into managing real estate and living off investment income through rent payments, a multi-family home is often the first step on that journey. Instead of taking on a huge commitment like a more developed apartment building or going after fixer-upper properties, many real estate investors get their feet wet being a landlord for a multi-family home, tending to the disparate needs of two to four families and working constantly to make sure that units are filled with happy, paying tenants.

Multi-Family Stepping StoneWhile that may sound simple in theory, getting a first taste of being a landlord can often present challenges that initial investors did not plan for or hoped not to encounter. Indeed, as a first-time investor, you can almost bet that something will go awry during your transaction and some problem-solving skills will be called into play for a problem you never saw coming. Before you get involved with a multi-family home as your first investment property, keep a few things in mind.

Small to Them, Big to You
In some cases, you will buy an investment from a larger company or a more prominent investor that has moved on to bigger projects. While during the transaction they may play up the property as something that rents itself or has very few maintenance issues, keep in mind that while they are certainly sugarcoating some of the aspects of the property, a long-time investor will also be used to problems, have solutions ready and perhaps downplay them in their own mind before ever deciding to sell.

As you investigate buying a property, take the initiative to hunt down a few of the details mentioned by the selling investors. While it may be a small multi-family investment to that investor, it is a very big step for you, and making sure you get it right could change the way your initial investment career shapes up. Issues like late rent payments may not phase a larger investor, but for you, any missed payment is a big portion of your monthly income, so investigate those types of situations thoroughly before getting involved with a particular multi-family piece of real estate.

Take Note of Your Own Accomplishments
Any multi-family property will have its share of issues that can range from broken water heaters to tenant disputes to potential evictions. As you go through this process of managing a small number of tenants for a multi-family home, pay attention to what you do that solves those problems and the people you involve to land that solution. If you decide to move up to a bigger property or add other multi-family homes to your portfolio, you will need to put that learning experience to use on a bigger stage.

In fact, tenants generally have the same basic set of needs no matter what size of property they might live in. Tenants are looking for a safe, relatively quiet place to relax after work and perhaps raise a family. If you are not providing that, examine your habits and develop methods that better fit those needs. Tenant turnover hurts the profit potential of any property, so hone your skills on a multi-family home so that you will be better prepared for challenges down the road.

Whether a multi-family property is your first step in an investment career or the 40th, there are things to be learned from the experience. Make sure that you not only take the job seriously, to begin with, and research the property thoroughly before ever getting involved but also keep good track of what you do to solve problems for particular tenants as the skills you use on a single multi-family home will translate well throughout your investment career.

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