Category: Real Estate Investors

Purchasing Multifamily Property: How to Ensure You’re Making a Good Investment

Posted on by Cultivation Network Admin

Multifamily properties may range in size from duplexes and townhomes to larger multi-unit apartment buildings. Regardless of the number of units, you as an owner always have the ability to make a strong investment with excellent yields. Here are a few key considerations to review and ensure you are making a decision that is right for you.

1. Past Real Estate Sales

In order to determine if you are receiving a fair price from the seller, it is wise to check the records of the property’s previous sale prices. Your realtor can help you locate these, and they are important to check against the current housing market and inflation. If you determine that the price has not been set fairly, you will want to negotiate this with the seller. An upward trend in the sale prices will also indicate that this area is increasing in value and therefore a strong investment. Also be sure to consider the recent sale prices for other multifamily properties in the area. This will also help you determine a fair price while reviewing similar properties to stay competitive. 

2. Location

The general area of the property is also key to ensuring you are making a reliable investment. First, consider nearby amenities. Are they in good condition and attractive to the residents you hope to attract? If the area is slowly improving over time, you may receive a better price on the sale but risk not having full occupancy or the desired income. Next, review the proximity to major highways, employers, and attractions. Residents may be more inclined to pay a higher rent if they have convenient access to valued amenities. Finally, determine how convenient the location will be for you as the owner. If you live in Nashville or the surrounding area but are looking to invest in the growing communities of Smyrna, LaVergne, or Murfreesboro, you may want to consider using a property management company. MMC Properties has decades of experience managing properties in these communities and can provide your residents with a high-quality experience. This also allows you to focus on the investment itself without spending time on the day-to-day operations and tenant needs. 

3. Estimate Income 

The number of units will help you determine the income you can expect to receive for the property. For new investors, it may be ideal to consider properties with two to six units. This ensures the investment is low risk, because if one tenant moves out, you can still receive income while waiting for another to lease the unit. Whether you are a seasoned multifamily property investor or just starting out for the first time, a property management company can help you retain residents and keep occupancy high. Your personal time is valuable, and the professionals at MMC Properties are dedicated to the care of your multifamily rental residents. They provide maintenance, resident support, and even billing services all on your behalf. When determining your estimated income, you will want to consider this vital service in your budget to ensure your residents are cared for and the return on your investment stays high.

To speak with an expert at MMC Properties today, call (615) 849-9006.

Six Signs You’re Working with a Trustworthy Property Management Company

Posted on by Cultivation Network Admin

They Are Digital 

In this connected age, more and more renters are searching for properties and making decisions based on what they find online. You will want to look for a company that can reach potential tenants where they are – the internet. It is not only about having a great website and property listings. Renters also expect to be able to make maintenance requests, pay bills, and stay updated on property changes digitally. When you find a property management company that has invested in technology, this is a sign they are also invested in keeping vacancies low and customers happy. 

They Have Reasonable Fees

As you begin to narrow your search, you will want to compare the management fees of local companies or search for the averages in your region. Determine what is a fair and reasonable percentage, with the understanding that you often receive the quality of service you pay for. Keep in mind that a lower fee does not always signify savings for you as the owner either. If a low-fee property management company does not have the same dedication to quality, your “cost of vacancy” may be much higher when tenants move out due to a negative experience with that company’s staff. 

They Are Conflict-Management Pros

Do not be afraid to ask straightforward questions when interviewing a potential property management company. Ask them to offer specific examples of times they resolved a conflict with a resident or vendor. Understandably, residents may experience higher levels of emotion when it comes to unforeseen concerns with their apartment or rental. They view this wonderful property as their home too, and you want to find a management team that can handle their needs with sensitivity to reach a solution.

They Are Well-Maintained

If possible, take a few in-person tours of the properties the group manages. Consider the cleanliness, safety, and aesthetic of each location. Look for things like functional outdoor lighting, waste receptacles, and landscaping. If you visit a property with poorly maintained flower beds, broken amenities, or noticeable overflowing garbage, this is a sign that the management staff is not paying enough attention to detail. Oftentimes, residents may decide to vacate a property that is not maintained to their preferred level of care. 

They Are Committed 

Your residents may have concerns that arise outside of regular business hours, so if your rental property does not offer any after-hours assistance, you may want to take a closer look at their commitment to resident satisfaction. One benefit to using a property management company is the peace of mind knowing your tenants’ needs will be addressed immediately, without requiring you to take valuable time away from family or work to resolve the issue.

They Have Rave Reviews

Few things are more valuable than real testimonials from their residents and clients. Ask the property management company you are considering for referrals you can contact, or use reputable online review sites to research their satisfaction rating. Ask the referrals what they liked and did not like about working with the company and their staff. You can bring any negative feedback to the company’s attention in case they made relevant changes. Receiving more positive feedback, especially in areas relating to responsiveness and tenant satisfaction, is an excellent sign you are choosing a trustworthy group to represent your property.

The experts at MMC Properties are professionally-trained experts with decades of experience in real estate and residential management. If you own an investment property with the intention to rent, call (615) 849-9006 to speak with an MMC Properties staff member today. 

Three Benefits to Purchasing a Multi-Family Property

Posted on by Cultivation Network Admin

Low interest rates have broken headlines for more than nine months through late 2020 and early 2021. However, the high cost of lumber and building have also been covered by national news outlets. But what does this mean for you as a potential real estate owner? 

It means that now is an excellent time to purchase a pre-existing home, especially if you intend to rent the property. One of the best ways to maximize the return on your investment is to purchase a multi-family property, such as a duplex or large home that has been subdivided into independent apartments or condominiums. Below, we outline three benefits to purchasing a multi-family in the current early 2021 market.

1. Interest Rates Are Low

In 2020, the Federal Reserve cut interest rates to the lowest percentage since the 2007 recession. This dropped the average lending for real estate to about 3-4%, compared to an average of 5% before the pandemic. If you are choosing to invest in real estate now, you will most likely be able to borrow at a low rate, therefore also receiving a lower monthly mortgage payment. Consider the price you plan to charge to tenants when determining what you would like to spend on your mortgage payment as well. 

2. Affordable Housing Shortage

Even prior to the pandemic, there was a shortage of affordable housing options. On a national average, there was only 33% of the need being met – leaving 67% of those in need of rental housing without options. The high cost of lumber also meant that those who may normally be able to afford to build simply cannot afford a custom home due to increased building expenses. As a side-effect of the pandemic, many households saw a significant reduction in their income and savings, whether they were laid off, furloughed, or simply did not receive an annual bonus that they were expecting. These factors combined have led to many families seeking to rent a townhome or condo that has more space, similar to a traditional house, but does not require a large down payment. 

3. Minimal Time Commitment

One benefit to investing in a multi-family home is that it can require very little time on your part, if you choose to use a property management company. After making your purchase and completing any necessary renovations or updates, you can utilize the expertise of a management company to handle the day-to-day needs of your tenants. This can involve anything from marketing the property and conducting tours with potential residents to resolving maintenance requests and charging rent payments. The real estate professionals at MMC Properties have decades of expert experience and are fully equipped to meet the needs of your residents. If you are considering a multi-family home as an investment property, call (615) 849-9006 to speak with MMC Properties about the management services they can offer your residents.

What To Look For When Buying a Multifamily Property

Posted on by Cultivation Network Admin

Deciding to purchase a new multifamily property is an exciting challenge to undertake! With every challenge comes a variety of obstacles. Once under contract for the building, having the property inspected should be the one thing that is done as soon as possible. If there is something uncovered that was not expected, then you have the ability to still walk away. We’ve compiled a small list of things to pay attention to when in the process of purchasing a multifamily property. Of course, depending on the contract, will affect the other things you should look into. 

Unit Inspections

Naturally, an inspection of each individual unit should be done. Inspections on common areas, utilities, and the general exteriors of the building. This does not need to be done by you personally, you can hire someone else or another company to do the inspection process in your stead. Once the inspection is completed by the professional you’ve chosen, they will be able to report any findings and the current condition of the building. 

Real Estate Tax Bills

When overlooking the property tax data, it can tell you a lot about the property. Always look over the status of current and prior year’s bills, as this can give an insight into the motivation of the seller based on the date that the bills were paid. Depending on your location, some county appraiser websites may provide calculators to help you estimate how much the bills may go up after the acquisition.

Pending Litigations

It’s important to check if there are any pending litigations. This is actually a common thing, even for newer apartment buildings. Here are a few important questions to ask: 

  • Are there any pending lawsuits? 
  • What are the complaints? 
  • Are there structural issues? 
  • A bad management track record? 
  • Who will be on the hook for any compensation or judgments? 
  • How might litigation impact the ability to buy and close on the property?

Services

Keep a tab on the services that may have been promised via lease to the current tenants. What services have they been promised, if any? Does the current owner offer laundry appliances or internet? Are there leases on equipment or service contracts in place that are needing to be addressed, cut or renegotiated?

Looking for professional management for your new multifamily property? Contact MMC Properties today at (615) 849-9006

Investing in Multifamily Real Estate

Posted on by Cultivation Network Admin

You’ve been investing in the real estate business for a while, but you want something that will be a challenge. Multifamily properties may very well provide that challenge you are seeking – with great potential for reward. Are you determined to take on the increased responsibility, liability, and capital reserves required to buy a multifamily property? In order to find out if this is truly what you’re aiming for, we’ve compiled a few reasons why this is a great investment and what you should expect. 

Know What You’re Getting Into

Here’s a starter question: Do you want to be a landlord for reasons other than the money? Your due diligence to taking on this type of property should include an attitude check to determine if you want to deal with the management. Headaches that come with a property usually are based on the quality of the neighborhood and the age of the property. These facts can be determined by the properties classification — either as A, B, C, or D class property (A being in the best condition) — and buy according to your financing and budget. There is often less inventory of multifamily properties than there is for single-family properties. This means you may have to sacrifice location or property condition to find one in your price range. In many cases, investors often fail to confirm property is legally zoned for its use and number of units. It’s also good practice to have a property lawyer set up your leases and an LLC to own the property.

Ask for Detailed Paperwork

Request income and expense statements for the current and previous years, current rent rolls, service contracts and all existing reports. Go over all of this paperwork you’ve obtained and make sure the historical information matches with your expectation of the current operations- if they don’t, make it a goal to find out why. Make yourself very familiar with the vacancy rate in the neighborhood and make sure to talk to the tenants directly to get honest feedback about the building’s condition and potential problems. Verify proof of rental payments, copies of leases and have security deposits transferred to you and meet all of the current occupants. 

Benefits of Investing in a Multifamily Property

  • Bigger Cash Flow – If a single-family property generates a single monthly income, why not invest in a multifamily property producing multiple forms of income? These investments represent an innovative opportunity to generate additional income from one investment. As an added note, some investors may have the opportunity to live in one unit and rent out the others for income.
  • More Control Over Value – The more income that a property receives, the higher the value is. The more units there are to be occupied, the more monthly payments received. 
  • Larger Pool of Tenants – Less risk is involved in investing in a multifamily property. Unlike single-family properties, where income is lost when the home is vacant, multifamily properties have numerous units and alleviate the total economic loss for investors.
  • Scalability –  Multifamily investments epitomize scalability. Rather than purchasing individual properties and slowly growing your business one by one, these investments present the opportunity to acquire multiple properties within one building. Maintaining this type of property also allows you to increase your portfolio. 

Looking into investing in a multifamily property like an apartment complex in the Middle Tennessee area? Does the complex need professional property management? MMC Properties is available to assist you! Contact us at (615) 849-9006 and browse our investor information today.