Investing in Omaha multi-family properties is a solid choice to strengthen your investment portfolio. You gain efficiency with consolidated! Our step-by-step guide will help you understand how buying a multi-family property will benefit you!
Are you ready to take your real estate investing to the next level? While single-family-residences (SFR) make great investments, many investors yearn for simplified management (and taxes). Omaha is a great community to begin consolidating your investments into multi-family properties. One advantage of multi-family property investment is if one tenant moves out, other units can still cover the bills. If you think you are ready to invest in multi-family properties, there are a few things to consider…
How Will You Finance the Deal?
Although some investors chose to pay all cash, there are big advantages to using credit. The biggest is you can buy three properties instead of one. Consider working with silent investors, investment lenders, and trusted partners to generate the revenue needed for the initial purchase of the investment property in Omaha. We also have strong community banks in Omaha that might support your investment. Once you know how you will pay for the investment, you can begin the process of finding the right one.
Are you Hands-On or Care Free?
Do you want to be in the day-to-day building operations? Do you enjoy crunching the numbers yourself, or prefer sitting back and collecting dividends? If you prefer to self-manage, you might still consider finding a handyman and plumber before emergency strikes. Using a property management service can relieve the call volume and drama, but expect to pay up to 10% of your gross income. Some investors, especially those who live out of state, prefer a turnkey management solution. In this approach, buy the multi-family complex fully rehabbed and occupied, with property management in place. The costs are higher, but units can still be profitable if purchased well. By knowing your investment style and how much time and work you want to put into the property, you’ll be able to ensure your investment meets your expectations.
Find Investments That Match Your Criteria
Have you defined your investment criteria? That simply means what you are looking for. It could be the number of beds and baths, CAP rate or ROI, or type and age of the building. It’s important to know what you are looking for in the investment property. Also, know your limits and what you will or won’t settle for. If your criteria are clearly defined, you won’t be tempted to jump at something that isn’t a good fit. Just like an auction purchase, set a plan ahead of time and stick to it. Many investors have fallen into the trap of buying more than they can handle and being stuck with a property that causes stress. As your investment portfolio grows, you will be able to dive into bigger and better properties. If you are just starting out, consider working with a partner who can protect you from mistakes. The team at Chenoa Investment can help to provide you with some of the best multi-family opportunities in the Omaha 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. Keep in mind these are tools (or rules-of-thumb) and don’t work the same in every market. A few common 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. This is impossible in some places, while some investors get 2%.
- 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. A lower cap rate has a lower risk.
- 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 Professional in Omaha
When looking for a multi-family property in Omaha, you can always choose to work with Chenoa Investment who offers knowledge and experience in the local area. We can help you find the best multi-family and commercial properties to add to your real estate portfolio and even introduce you to other professionals. 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.
