Tips for Boosting Your Multifamily Real Estate Returns
Updated: May 22
Stable demand for rental homes–even in tough times–makes it an ideal investment for those looking to build their wealth through multifamily real estate. While there is no shortage of opportunities in the industry, a tailor-fit strategy can make a difference in how fast and effective you’ll build towards your investment goals.
Here are three things that can help you gain the most returns from your multifamily investment:
A Location That Works
Much like how a tenant will look for homes that cater to their means and lifestyle needs, investors would have to look for areas that offer them the potential to scale their capital.
Your selected location doesn't have to be highly sought-after at the moment of investment. Often “hot” locations come with a more expensive price tag. Widen your search to places with plans for development, where you can benefit from the next waves of growth. Through your assessment, keep in mind which market you’d like to reach and key features they look for in a home– access to community, amenities, and job opportunities among others.
The 50% Rule
Making the most returns from an investment requires good resource management. According to the 50% rule, half of your gross income should be allocated for operational expenses. This covers compliance fees and upkeep that will keep your tenants satisfied and your investments running.
Applying the 50% rule will give you an idea of your net income and guide you in how aggressively you should be investing to meet your ideal returns. A Little Guidance from Cap Rates
After calculating a property's cash flow, you can proceed to check your Capitalization Rate or Cap Rate. This metric helps investors compare different properties by providing an estimate of how long it will be before an investment yields a profit.
To arrive at the Cap Rate, you will need the net operating income (NOI) and divide it by the purchasing price for the property. You can also find out this number with your General Partner.
These are just some of the ways you can assess and strategize for your multifamily investment. Explore more ways to maximize your returns on passive investment opportunities in Texas by reaching out to our team at Makaan Investment Group. We will help you make profits on multifamily investments in Houston, Texas, and achieve your financial goals at the soonest
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