7 Tips to Invest in Multifamily Property

Buying a multifamily property can be an important next step for a real estate investor who had previously purchased single-family homes to rent to tenants. Doing so can allow you to produce more income and build net worth faster, if you’re up for the challenge.

“You’re ready to buy a multifamily property when you’re excited about the idea,” says Brian Davis, a real estate investor and co-founder at SparkRental.com. “I’ve known people to buy a multifamily property as their first investment property, and I’ve known investors to buy dozens, even hundreds, of single-family properties because that’s what they liked.”

The key to determining whether the increased responsibility, liability and capital reserves required to buy a multifamily property suits you is performing careful due diligence, so heed the following tips from real estate experts:

Consider living in one of the units for favorable terms. If you buy a building with four units or less and live in one, you can qualify for owner-occupied financing with little money down, while investors usually have to put at least 20 percent down, says Mark Ferguson, a real estate agent, investor, author and creator of InvestFourMore.com.