Challenges of Multi-Family Investment Properties
Even the most reliable commercial property investment has its own challenges and risks. If you are thinking of investing in a multi-family property, working with an experienced and knowledgeable investment professional can help. Get advice and guidance from Perfect RealEstate Investments.
Unlike industrial or hospitality commercial properties that push for a minimum of three to five-year leases, residential properties typically only offer 12-month leases. While this isn’t necessarily a bad thing, there is an increased risk of tenants moving after their one-year lease is up. This can increase the amount of time needed to market empty units, find new tenants, and maintenance costs that are incurred when tenants move in and out.
With more units, comes more maintenance and service requests. A multi-family investment property will need to be closely managed to ensure all essential symptoms are working efficiently, such as plumbing, HVAC, and electrical. With more people, there may be more late night calls for maintenance as well. When considering this type of investment property, you will need to ask yourself if you have time to manage the property or if you will need a professional property management company.
You may have noticed yourself that some Ohio neighborhoods grow and others decline. Communities, neighborhoods, districts, and even individual properties tend to follow a four-phase life span:
- Growth: The area/property gains acceptance and experiences growth.
- Stability: Growth levels off and the area maintains a level of stability without significant gains or losses.
- Decline: The area/property begins to decline and demand decreases.
- Renewal: There is a period of rejuvenation as the market increases and the phases start over.
Real estate investors need to be aware of what phase a property or area is in before investing and how that can affect their overall strategy.
Even though it’s easy to understand the risks on the surface, it’s another thing to actually experience them first-hand. If you are considering investing in multi-family properties, work with the team of real estate investors at Perfect RealEstate Investments for personalized advice, honest opinions, and expert guidance.