A residential multi-unit building is a good investment that will give you profit for years. This will, however, depend on a lot of factors, and before spending your life savings on an investment as big as this, you need to do your research and gather as much information to guide you in your venture.
- Determine the location where you want to buy a multi-unit building. It is assumed that you want to gain profit from renting out residential units, so it is important that the location of the property that you will buy is accessible to public transport, the basic infrastructure such as electricity, water and communication is in place, and that stores, hospitals and schools are within reach. Decide whether you will be occupying one of the units, since lenders are inclined to approve loans if the owner of the multi-unit building will also live there. Take a look at the neighborhood and assess whether it is a good place to live in. Research on the crime rates in the area, and observe the people living there. Sometimes, one look at a place and you are sure that it is not a good place to invest in. Trust your instincts and get the facts.
- Research for the rental rates in that neighborhood. Find out whether there are existing residential units for rent within the vicinity and ask for their monthly rental fees. List these down for your reference. Ask about the arrangements with tenants, whether electricity and water bills are included in the rental fees or not, and if pets are allowed. This will give you an idea on the terms that you will set for your future tenants, and the rental fees that you will charge them. Keep in mind that you want to make a reasonable profit out of this venture.
- Hire experts to inspect the multi-unit building with you. It is important to know the history of the multi-unit building that you will be purchasing. Have experts with you when inspecting the building and ask the current owner or seller about details on the building’s construction. This will help you when you negotiate for the price later on. Take note of damages and the repairs needed to make it habitable. If the unit is fairly new, find out how many tenants have occupied it before and check out every corner for damages. Ask an expert to estimate the cost of repair. This will give you an idea whether it is worthwhile to invest in this property.
- Find out the market value of the multi-unit building. Get in touch with the local bureau or agency that assesses the market value of properties in the area. You can also hire an expert for that. This will serve as your guide for the negotiations later on. Also take note of the market value and actual selling price of the properties nearby.
- Negotiate the price with the seller. Use all the information that you gathered to bid for a reasonable price that will compensate the seller as well as give you an opportunity to gain profit from the rental payments later on.