When most of us started out as real estate wholesalers, our primary focus was on single or residential homes and properties.
Being able to comp these properties the way an appraiser does is extremely important, that way you’re able to price your deal correctly.
And many of us will still do single-family homes because they’re easy to come by; despite all the news on the current housing market and housing prices, as I’ve said in the past, there are still buyers and still sellers who are trying to sell their homes.
But if you’re looking to build out your investment portfolio, what is there after a single family?
The Path to Multi-Family Real Estate Investing
Multi-family real estate investing is the focus on multi-family properties, like apartment complexes, condos, etc, and deals can be in a similar way that we do single family, with a difference – the way we comp.
I teach and coach my Astro members on how to comp like an appraiser would and you might actually think that the same rules for single-family would apply for multi-family, right?
It does not.
Multi-family properties actually have to be approached based on income.
This was a topic I discussed recently with one of my Astro members:
The appraisal rules for single-family are based on the square footage, number of rooms, location, and more; multi-family is based on net operating or gross income.
Market considerations for multi-family are either:
High demand, high appreciation
Low demand, low appreciation
These two things can determine what a buyer will look for when it comes to returning on gross rent. Now a big thing to keep in mind, if multi-family is the path you plan to go down, is the decreased demand due to interest rates.
Currently, the Fed’s work on trying to curb inflation has raised interest rates not seen in nearly a decade. Of course, this is going to have an effect on both sellers and buyers and that’s been reflected in our current housing market.
So what should new multi-family investors do?
As always, I recommend speaking with someone who is in the know – in this case, contact commercial brokers in those areas that you want to focus on and find out what those properties are going for.
And of course, AstroFlipping is a resource for new or seasoned real estate investors when it comes to all types of wholesaling.
We have members who have done multi-family or who are currently doing multi-family and they can certainly advise and support you if needed.