Several things to keep in mind when you invest in multi-unit residential properties:
- Find a Real Estate Representative who has dealt with this kind of properties in the past.
- Shop around for better mortgage rates and find out their terms. Most banks offer residential rates up to 4 units.
- When thinking of buying an investment property it is a good idea to find out the zoning for that particular property, so that you would know what exactly is allowed by current zoning.
- Do not mix “Legal” and “Retrofit” properties. In so many words, “Legal” multi-unit residential property is the present use that is allowed by zoning. “Retrofit” refers to weather the property meets current fire regulations, i.e. fire-rated doors, fire-rated drywall, etc. I would strongly suggest seeking professional advice.
- Always do inspection of the house. Even if it is a multiple offer situation, it is always a good idea to do an inspection. Maybe to do it before the offer day, this way you know exactly what you are buying and you can still bring a “unconditional” offer to the table, if that was your original plan.
- Check the rent prices in the area to see whether there is a room for improvement.
- If current tenants are present during inspection, it might be a good idea to ask them if they are happy with the place and if they are planning to stay. This way you will get a better feeling about the current tenants.
- Pay attention to the outside of the building. The general rule of thumb is that if grounds are taken care of, the building is taken care of as well.
- Do your numbers. When calculating the net operating income, remember to include property management fees, if you are planning to hire someone to take care to your property. If you are not sure about your numbers, it is a good idea to contact your accountant for an advice.
- It is a lot of work, but the pay back is great if you do it right.