5 Most Important Things to Keep in Mind when Buying a Multifamily building in Nashville

2015/02/Ireland-Street-Townhomes-featured-764x437-300x171.jpgDo you know what has been the most striking change in Nashville’s real estate markets recently? Well, due to the growing interest of developers in constructing multifamily homes, multifamily housing projects are coming up in all desirable locations like Green Hills, Music Row, Hillsboro Village, West End, East Nashville, 12South, Sylvan Park, Germantown etc. At what pace the sector is growing can be understood from the simple fact that while nearly 1,330 multifamily units were constructed in Nashville in 2012, the number of units jumped to 3,035 in 2013. The trended continued in 2014 and is yet to slow down. Needless to say, the sector is witnessing exponential growth.
Whether you want to become a live-in landlord or are buying a two-, three- and four-family homes as part of your real estate investment strategy, multifamily homes can actually be a great choice for you. However, you need to take into consideration the fact that buying a multifamily home can be comparatively riskier as they are much more expensive than a single family home.
Here are a few things that you should keep in mind while buying a multifamily home in Nashville:
Do your due diligence
You are buying a multifamily home to make some money, right? So the first step is to do some quick, but careful calculations, you need to determine the estimated rents that the particular number of units will bring in. To calculate the rents, you would need to know the medium rents in the area. You also need to calculate the mortgage expense in relation with your income and potential repairs required. Get a professional home inspection conducted before making an offer on the property. You should also prepare an estimate of the net operating cost.
Think about how you will manage the property
If you are time poor, you can consider hiring a professional property management agency to take care of rent collection, tenant screening and other such tedious jobs. It will lower your income, but it will also take away the stress. You will be able to manage the property in a more organized way which will build your reputation as a good landlord in the rental market.
Create customer persona
Before you jump to the conclusion that a particular building is right for you, you must consider who will be interested in renting it. A one-bedroom unit may be more popular and rent out more quickly than a three-bedroom unit, depending on where the property is located.
Ensure that you are prepared for difficult times
There may be times when you will likely not have tenants, so less income from your investment. Before investing in a multifamily building, you must ensure that you are prepared financially to deal with this situation when you have to face it.
Know your financial options
If you plan to purchase a multi-family property that contains more than 2 or 3 units, you will probably need to apply for commercial financing. The process of obtaining commercial financing is different from that of obtaining a traditional mortgage. Discuss your requirements with lenders to know your options.