How to Assess Multifamily Investment Opportunities
Updated: May 22
There are no guarantees for investments, but there are telltale signs you’re headed for success. In real estate investing, this means knowing how to assess the viability of properties and how it aligns with your goals and timeline.
You could be looking for immediate returns or long-term but higher-value returns. In multifamily investments, you get the best of both worlds with periodic dividend releases, rental income, and equity multiples after the holding period.
Some investments offer positive cash flow and immediate returns, while others lean towards long-term results. In multifamily investments
Are you considering investing in these projects? Here are the key things you should assess before you invest in multifamily properties:
1. The Cash Flow: How much do you stand to make?
Having a projected income will help you manage any costs related to your investment. To be profitable, you need your net operating income or NOI to be greater than the costs related to the property. This means your total income must exceed the property expenses and any payments related to the investment.
Compute your NOI:
NOI= Total Expenses- Total Operating Expenses
Your expense list should be as comprehensive as possible, including utilities, insurance, property taxes, and repairs. In the same way, your income should account for all sources of income, such as rent, parking fees, vending machines, etc.
You can get your projected cash flow by adding a buffer to your NOI for unexpected expenses. Your funding source also figures into the goals here, as you cover any bank payments related to your investment.
To get the most accurate number possible, speak to General Partners like Makaan Investment Group. We can help guide you through the numbers for your multifamily investment.
2. The Opportunity: How viable is the investment?
Consider the location, property class, and neighboring developments in selecting your multifamily investment.
Where there is solid population growth, access to transport and amenities, and upcoming developments, there’s much room for your investment to thrive. Tenants look at communities, not just the property itself, and spotting the right ones sets you up for success.
For existing properties, looking at historical data will help you get an idea of occupancy rates for the property and the location.
3. Your Partners: Are you working with the right people on your investment?
Work with people who can help you achieve the maximum ROI for your investment.
If you’re actively investing, this means vetting all your contacts from the property seller or suppliers for property upkeep to ensure you get the best deals for each transaction. If you’re passively investing, you must find trusted partners like Makaan to help you explore the strategies from taxation to property management to get the most from your property investment.
Having the right people to help you with your property will generate savings that can grow as you scale your investment.
Are you considering passive investing in Texas? Message our team at Makaan Investment Group to help you assess if multifamily investments suit your needs. You can also call or text us at 281-500-8554.