PEKIN, IL – Even with a strong labor markets continuing to grow, the wage growth has been relatively slow. The Local Records Office predicts this could stifle consumer confidence and spending, eliminate the possible savings and ultimately hurt retail and multifamily sectors.
And this years’ construction continues at higher levels and apartment pipeline going downward towards pressuring occupancy rates and rents, Collier reports. Some economists speculate with the new tax law in effect will spur even more demand in the multi-family market, because the system has slashed some benefits of homeownership, making it less attractive and renting more likely.
While apartments are the second the most popular product type with investors in 2018, aside of Industrial, the Fannie Mae projects the net rental demand to rise from 380,000 to 460,000 units in 2018. However, multi-family construction is heavily concentrated in America’s largest cities, where there are pockets of oversupply projected.
There are some pros and cons to consider before investing in a multi-family real estate:
Pros of Investing in Multi-family Rental Properties in Pekin, IL
Getting financing and loan options are a better guarantee than other types of investment properties.
Property management is more convenient and easier as you can manage multiple units in one building; as it comes with many tasks, from dealing with property maintenance, collecting rent, to dealing with tenants’ complaints.
Paying a property management company for multi-family homes will end up costing you less, because they are managing one property with multiple units, thus, reduces your expenses.
There is less competition compared to single family homes.
More income is generated in multi-family homes, means more cash flow! And vacancies will unlikely occur in multi-family investments, as more and more people are starting to rent.
Property insurance will be more savings on the business side, and will save you the pain of getting multiple policies for multiple properties.
Cons of Investing in Multi-family Rental Properties in Pekin, IL
Cost more compared to other properties in the real estate market –which means larger down payments and they cost more in maintenance and repairs.
More tenant to deal with; can be from whether they get along with each other to being willing to deal with complaints and /or demands.
Dealing with multiple-family housing units all at one time; you must consider the efforts in managing and make the right decision on whether or not a real estate investment is for you.
Government regulations –and restrictions can prevent you from raising money or you may find yourself in a mountain of legal problems. You will need to look further into what you can and cannot do.
In any case, the natural step for a real estate investor is to earn income while they are sleeping, eating, or enjoying life and has a great potential to give you freedom.
There is a quick reference on Mashvisor, 21 Tips for Landlord of Income Properties that provides successful tips in moving forwards as a landlord or even can be used for those landlords who just need an extra boost of guidance for dealing with any issues.
When looking into any investment deal, the search always begins with the foremost important factor in real estate, the location. As most tenants will choose a location to rent, you do not want to get stuck in a bind with choosing a property that is in a high vacancy rated area. So pay close attention to high-growth and high-yield areas where properties are high in demand, and in well-maintained areas.
The next step is evaluating the property as a whole; consider the number of units the property has, the number of bedrooms and how much each unit will rent for.
Determining the potential income a property can accrue by using rentometer.com will give you a semi-accurate amount for what rent goes for that particular property address. And some landlords will tend to charge less than to going price to make sure there renters stick around for a number of years, as it can become more costly having to go in and gut out the apartment every few months.
It is also important beginners understand the importance of lucrative spending and to spend only fifty percent of their income on expenses –not just the mortgage.
Owner-occupied financing is helpful, and can greatly influence the qualifying process; it is when an investor chooses to live in one of the units as the gained income from the second unit is factored into the lender’s qualifying ratio.
The purchase price is greatly impacted by the seller’s motivation and it’s best that investors become aware of whom they’re dealing with when evaluating the purchase price. As a bank-owned property has more potential of savings and is dealt with much different that a for-sale-by-owner property.