- Identify the size of property you are comfortable with and what you can afford based on the amount of funding you have available to use for the down payment.
- Begin your search. Methods include: Online door knocking, phone calls, mailings, network.
- Visit the properties. You must see the property in person in order to get a feel for it. Always go with your gut!
- Once you find a property. Start by reviewing the financials and determine if it will be a cash flow positive property for you.
- Sourcing the correct financing. Remember, never take on more than approximately 75%.
- Carefully navigate the due diligence period. This is where any issues should be uncovered. Structural defects, errors in financial statements, tenancy issues, etc.
- Calculate future expense increases. Taxes, insurance, utilities all increase each year. Factor them in to make sure that your rent increases keep up with these expenses.
- Identify the property manager. Will you be doing it yourself or hiring a professional manager? Will you have a superintendent on site? Identify this to determine costs, time involved in the property, and how much you will make.
- Identify your exit strategy. Determine if the projected property value will make you an appropriate return on your cash outlay and how long until you would see that payout.
- Close the deal. Once all of the above conditions have been meet, work towards closing the deal and becoming a multifamily investor.
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