Buying a multi-family property in Detroit is one of the best ways to grow your investment portfolio. With more doors, you have more people writing you a rent check each month! Learn more about how buying a multi-family property in Detroit will benefit you in our step-by-step guide!
Are you interested in buying multi-family in Detroit to add to your investment portfolio? Having more doors can easily mean more profits, but there are a few things you should consider first. Many people love multi-family property investment because if one tenant moves out, you will still have others who can cover the bills. It can be a great investment vehicle as long as you know what you are getting into! If you are ready to invest in multi-family properties in Detroit, keep reading to learn more about it and to find out if multi-family real estate investment is the right choice for you!
Determine Your Financing
When buying a multi-family property in Detroit, you don’t have to necessarily have all the cash to purchase upfront. Instead, you could work with silent investors, investment lenders, and trusted partners to generate the revenue needed for the initial purchase of the investment property in Detroit. Once you know how you will pay for the investment, you can begin the process of finding the right one.
Determine How Hands-On You Want To Be
How involved do you want to be in the day to day operations for the building? Do you want to crunch the numbers yourself, or do you want to sit back and collect your dividends? Depending on your level of involvement, you may need to hire 3rd party services to help you with the investment. You may need the help of a handyman or a professional property management service to ensure smooth living for your tenants who call your building home. By knowing your investment style and how much time and work you want to put into the property, you’ll be able to ensure that you aren’t getting in over your head.
Find Investments That Match Your Criteria
When choosing to purchase a multi-family property in Detroit, it’s important to know what you are looking for in a property. Know your limits and what you will or will not settle for. Don’t jump at something that doesn’t match your criteria just because it’s shiny and attracts your attention. Set a plan ahead of time and stick to it so you don’t find yourself straddled with a property you are prepared for. As you begin to build your investment portfolio, you will be able to dive into those bigger and better properties. If you are just starting gout, consider working with a partner who can help make sure you aren’t making any mistakes with the purchase. The team at Sell Inherited House Detroit can help to provide you with some of the best multi-family opportunities in the Detroit area.
Run The Numbers
As an investor, you are likely familiar with some of the basic calculations you should perform when determining a property’s profit potential. A few of these calculations include:
- The 1% rule states that your property should be bringing 1% of its value month after month. So for example, a property that sells for $100k should rent for $1,000 each month.
- The cap rate provides the property’s potential return on investment and is calculated by dividing the net operating expenses by the property’s purchase price
- Your rate of return – many investors say that a good rate of return is anything over 10%. Anything above 12% is considered to be great.
- Your GRM stands for your gross rent multiplier and it tells you the total rent earned before any operating expenses are taken into account
- The cash on cash return will tell you how much of your down payment is being returned to you in cash each year
Running these basic equations can give you a quick idea of whether or not a property will be a good investment. Before you actually make the purchase, it is best to discuss the deal with a lawyer, an accountant, or your financial planner. While many of the numbers can be run on your own, it is always good to have financial advice from someone you trust.
Ask A Pro
When looking for a multi-family property in Detroit, you can always choose to work with Sell Inherited House Detroit who offers knowledge, experience, and vast knowledge of real estate in the local area. We can help you find the best multi-family and commercial properties to add to your real estate portfolio. We are happy to answer any and all questions about the process. If you are just beginning to get involved with multi-family real estate investment, having a trusted partner can help to make all the difference in the level of success you are able to attain.