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Top 3 Mistakes First-Time Multifamily Investors Make (And How to Avoid Them

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Learn the top 3 mistakes first-time multifamily investors often make and get tips on how to avoid them. Discover how to better manage expenses, research markets, and plan for the future. 

Investing in multifamily real estate can be a great way to build wealth. But if you're new to it, there are a few common mistakes you’ll want to avoid. Here’s a look at the top three mistakes first-time investors make and some simple tips on how to steer clear of them. 

 

1. Underestimating Expenses 

One of the biggest mistakes new investors make is not accounting for all the expenses that come with owning and managing a property. It’s easy to focus on the rent you’ll get, but there are a lot of other costs—like maintenance, insurance, property management fees, taxes, and unexpected repairs—that can eat into profits. 

When evaluating a property, be sure to factor in all the expenses—both expected and unexpected. A good rule of thumb is to set aside around 50% of the rent for operating cost, though this can vary depending on location and property type. Be sure to do a thorough property inspection to spot any potential repairs and set aside money for future upkeep and vacancies. Hiring an experienced property manager can also help you get a realistic estimate of ongoing costs. 

 

2. Skipping Market Research  

Another common mistake is not doing enough research on the market before buying a property. Factors like job growth, population trends, rent prices, and new development plans can significantly impact how well your investment performs. Skipping this research could lead you to buy in an area that doesn’t have strong rental demand or potential for growth. 

Before you buy, make sure to dive into the local market. Look at factors like job growth, population trends, and the demand for rentals in the area. Check if there are any big development projects planned nearby that could either help or hurt the neighborhood. Tools like Zillow or CoStar can help, or you can talk to a local real estate agent who knows the market well. 

 

3. Not Having a Clear Exit Strategy  

A lot of first-time investors focus on the short-term cash flow and forget to plan for the long-term. Without a clear exit strategy, you might run into problems when it’s time to sell or refinance the property, especially if things don’t go as planned. 

Before investing, think about your exit strategy. Are you planning to hold the property long-term for steady cash flow, or do you want to fix it up and sell it for a profit? If you plan to sell, look at comparable properties in the area to see how quickly properties are selling and at what price. Think about how easy it will be to refinance or sell when the time comes, and be prepared for any tax implications. Having a clear plan helps you avoid surprises down the road. 

 

How Makaan Investment Group Helps 

 At Makaan Investment Group, we help you avoid these common mistakes. We work with experienced property managers to ensure all expenses are accurately accounted for, taking the guesswork out of managing operational costs. We also conduct thorough due diligence, providing you with comprehensive market research and insights into job growth, population trends, and upcoming developments in the area. Additionally, we ensure every investment has a clear exit strategy, discussing refinancing options and tax implications before you commit. To keep you informed and confident in your investment, we provide regular financial updates so you can track the performance of the properties you’re invested in. By partnering with us, you gain peace of mind knowing that every aspect of your investment is carefully planned and managed. 


Schedule a consultation with us today and let’s discuss how we can help you grow your portfolio with smart, strategic investments. 


 

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