How to Find and Negotiate Multi-Family Housing ProjectsReal Estate Influence
November 12, 2012 — 920 views
How to Find and Negotiate Multi-Family Housing Projects
Depending on the depth of your real estate experience, purchasing a multi-family property for profit can be a lot more difficult than buying a single-residence home for your family. Because multi-family buildings usually involve tenants and sometimes retailers that generate profit for the owner, they are essentially classified as commercial real estate. That can make the looking and negotiating process difficult if you are new to buying large rental or mixed-use properties or projects. As a buyer, the first thing you need to do before you even start your search is learning as much as possible about commercial properties, applicable real estate taxes and effective building management techniques. Educating yourself on current market trends and applying a few simple tips during the negotiating stage can help you make the right investment and maximize your profit potential.
The most logical first step to any purchase is defining how much you can afford to spend on your investment and what type of earnings you expect to see in both the short and the long term after the initial sale. Once you understand how much you will need to put aside for maintenance, insurance, taxes and other expenditures, you should be able to come up with an acceptable price range fairly quickly. When you are looking at different multi-family housing properties, keep your long-term goals in mind. There is a big difference between buying a property that you plan to sell for profit in a couple of years and buying a property that you want to use as a source of income for the foreseeable future. In the former situation, you want to look at properties that have significant profit potential. For example, buying outdated properties and renovating them with intent to sell as soon as they are done will yield you a high profit. In the latter case, you want to look for properties or projects that will require relatively little maintenance and that will make good ongoing income streams.
Once you find a multi-family housing project that meets your requirements and budget, aim to close the deal quickly. Negotiations that drag on are stressful and complicated. Not to mention that constantly going back and forth can make you lose focus. Remember that you need to compromise, but do not back off to a point that puts you at a disadvantage and puts the seller in complete control. Whenever you make a concession to the seller, ask for something that will benefit your side in return until you reach an agreement that protects both of your interests.