As in any business, it is vital and important to assess your investment in a multifamily real estate, how that investment would turn out for you, investments required, risks involved and the potential profit returns.
To ensure the safety of your investment, first thing that must be ascertained is the location. If the place is safe, clean, close to commercial hub, schools and hospitals then you are going to get lots of inquires for your multifamily home.
After finding a potentially lucrative multifamily property in your preferred location, the next obvious question is to find out how much financially viable the property is for your budget and what are the projected returns on the investment.
To find the purchase price of the property, the best way is to find out the market comp d3tails. Comp involves finding the purchase price of other similar homes with same square footage and features. Based on the rates of the couple of similar homes, an average purchase price for your preferred property is calculated. Though not exact but could give you a fair idea of the purchase price of the property.
Apart from the purchase property there could be additional costs involved, costs required to upgrade the house, if there are any minor or major damages. To find these out, you need to hire a professional inspector to confirm all the problems, small or big, that could increase your spending in short and long term, thus eating into your profit margins.
After that, the most important part comes into play, how much you can earn from this investment?
Since this is going to be a rental property, through which you want to earn a fixed income every month, you need to calculate some crucial financial parameters to ensure that you get a good return on your investment like net operating income, cash flow and return on investment(ROI)
Net Operating Income = Total Monthly Income – Operating Costs.
Cash Flow = Net Operating Income – Mortgage Payment
ROI = Cash Flow / Investment Cost (down payment + closing costs + rehab costs)
This ROI value will give you a fair idea of how you much you can gain from your investment.
If you need more information on how to proceed with your real estate investment so that it becomes an extremely profitable investment with minimum risks then we at American Made Home Solutions are always there to assist you.
