5 Red Flags to Look for When Buying a Multi-Family Property

When done right, investing in multi-family properties can be a lucrative real estate investment. The shared features and proximity of the units can mean added savings for you as the owner and a higher monthly income from the time and investment into one real estate transaction.

Read on as we explore five red flags to look for when buying a multi-family property.

Adding Up

Sellers can be unrealistic about the value of a property. Some aren’t willing to budge, which will ultimately waste your valuable time, so move on if they state they won’t negotiate the price when it’s reasonable to do so. The facts on paper or presented to you verbally when compared to the realities about your investment need to come into complete alignment when you run your calculations to check for positive cash flow. If something isn’t adding up, this is one of the red flags to look for when buying a multi-family property.

Lingering

Suppose the property has been lingering on the market. In that case, this is a red flag to look for when buying a multi-family property, letting you know that all previously interested buyers have discovered one problem or another, and you should keep looking.

Rental History

If the owner isn’t willing to show you the records, including occupancy rate history and year-to-year profits, this is a huge red flag when buying a multi-family property. However, when it comes to investing your hard-earned dollars, if the current owner would prefer to throw guestimates out in the air, then you should walk away from the deal.

Location

Knowing your market pays in long-term value. You may have heard this before, but location, location, location. It’s impossible to overstate the importance of site when you’re investing in real estate. For example, if you aren’t comfortable walking the area, then you’ve spotted one of the red flags to look for when buying a multi-family property. Now, suppose the neighborhood is in the early phase of revitalization; you’ve investigated upcoming city plans for improvements, such as parks, and you noticed other properties in various stages of rehab. In that case, you may be getting in early on a great deal at a great bargain.

Condition

You shouldn’t invest in property because you get a good feeling. Instead, you need to watch for physical red flags with the structure when buying a multi-family property. While everything may look great in the listing, there’s just no substitute for seeing the property in person, where it’s easy to spot telltale signs of water damage or other obvious issues, including a general appearance of disrepair. A professional investor has a trained eye for what to look past, and what matters, so unless you’re highly experienced, it may be worth seeking help to assess your investments.