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Investing in any real estate property is a big commitment. But investing in a multifamily property—especially an apartment complex—is an even bigger one. It takes a lot of work to get your own apartment, and even more work once you have it. This is why it is often thought of as a full time job rather than just another investing strategy.
With that said, investing in a multifamily property can be very profitable if it is done right. Multiple units in a single building can give you a consistent stream of income from tenants who pay rent on a monthly basis. Apartment complexes may be expensive, but they are also reliable when it comes to cash flow. That is because it is not impacted by vacancies as heavily as single-unit properties. Even if one or two units become vacant, you can still get income from the other units, whereas you will lose your cash flow completely if your single-family property becomes vacant.
There is no denying the benefits of investing in your very own apartment building. But you have to do it right. It requires a deeper level of involvement than managing single-family units from the beginning. Make sure that owning an apartment building is the right step for you. If you do not want the responsibilities of being a landlord, you should consider other options such as flipping houses or investing in multifamily syndication.
Now if you are ready to find your first apartment complex for real estate investing, here is a guide on multifamily realtors and what you should look for when choosing one to work with.
Finding a Multifamily Realtor for Your Next Investment
Most real estate agents work with traditional buyers who are looking for a new home or sellers who want to market their residence. But as a multifamily investor, you want to work with a real estate agent who is “investor friendly”—someone who has spent a significant amount of time learning about the investment side of real estate and has some experience surrounding it.
An agent with some real estate investment experience can help you analyze a deal. They may even have access to off-market homes through their network. You need this kind of information and experience from your real estate because multifamily investing is not a walk in the park. Ideally, you should find someone who has a few real estate investments of their own. [1]
One of the biggest advantages that a realtor brings to an investor is access to off-market properties. These are real estate properties that cannot be found on the multiple listing service (MLS), including those that are not yet on the market.
Some investors have multiple agents working for them so they are always aware of potential investment properties. These realtors will help them find apartment complexes or other real estate properties that they wouldn’t be able to find themselves. By showing you these properties before they hit the market, you can avoid competition against other buyers.
An experienced real estate agent will help you navigate the tricky world of multifamily real estate investing. You may want to look for a full-time realtor. While there are many successful part-time realtors, this type of investment requires another level of knowledge, skill, and dedication that is best offered by a full-time agent. A full-time agent will also have more availability that will help you in your search. [1]
If you are interested in a specific neighborhood or area, look for a real estate agent with intensive knowledge of micro-markets. Some agents choose to focus on specific communities or neighborhoods in a given area. This gives them even greater insight regarding properties in those locations. They know all about local specifics and are therefore familiar with apartment complexes, restaurants, school districts, zoning regulations, building regulations, transportation, etc.
Market knowledge is critical: the more they know about the property and its surrounding area, the more they can tell you about potential multifamily investments. Firsthand investing experience is a great bonus because then they would know what investors are looking for in a multifamily property. These realtors have a good understanding of what a good deal is, as well as other small details that could make or break an investment property. [1]
Finally, you want to work with a real estate agent that has a broad network. Having many connections with contractors, insurance agents, lenders, and other professionals can help them secure more profitable investments. This saves a lot of time for the investor because they don’t need to spend time finding, hiring, and working with different contractors—they can simply tap on the existing network of their realtor.
How is a Multifamily Real Estate Agent Different?
For investors who are in the market for multifamily properties, it is important to work with a realtor who specializes, or at least has experience, in multifamily real estate. A multifamily realtor would understand your criteria. They know what makes an apartment complex attractive to investors. They also understand what a good multifamily deal is. Your realtor should take the time to understand your financial and investment goals. They can then help you find the right real estate property to invest in. [2]
Multifamily real estate agents take various factors into consideration. They think about cost, return, cap rate, vacancy rates, and risks. They think about amenities, number of units, and property management. They can provide critical information and specific data that investors need to know about prospective investments. As an investor, the more information you receive, the easier it would be to make a decision.
You can check with past clients to assess a multifamily real estate agent’s experience and expertise. By talking to other investors they have worked with before, you can get a good feeling about their success rate. Those who specialize in multifamily real estate should be able to close more deals involving apartment complexes.
In an ideal partnership between realtor and investor, the realtor listens carefully to the investor’s needs and concerns. They provide valuable data that help you make decisions. An initial interview should help lay the foundation for a good realtor-investor relationship. Do not underestimate the value of a good interpersonal chemistry. You will be spending a lot of time together as you work on your multifamily investment after all. [2]
Once you have chosen a multifamily real estate agent to work with, you will begin to discuss your options by reviewing all available properties, both listed and unlisted. You can then choose the properties you would like to view. They will then guide you through the rest of the process.
How Much or What Percentage Does a Multifamily Agent Charge?
Just like when you are buying a home, working with a real estate agent for your multifamily investment property means you have to pay their broker fees. While some investors try to cut costs by doing all the work themselves and never hiring a realtor, multifamily investing can be tricky and you might want to work with the experts. It is also an investment because they could help you find the most profitable properties and secure the best deals.
Agents work on commissions. This means they are only paid after settlement once a property finally sells. This also guarantees that the realtor will work hard to guide you through closing. Most agents charge a commission of 6%. This commission is typically split between the sales agent and the buyer’s agent. [3]
It might be worth paying a premium for an agent with a great track record. This means paying full commission. If the real estate agent has a less than stellar track record and you can’t find anyone else, you can at least try to negotiate the commission.
If you’re really struggling to find a realtor to work with, start with those who have the best reputation before working your way down. Paying a premium for someone who can get you the best deal on an apartment complex is a wise investment.
The only time you shouldn’t negotiate commissions is with a top-tier realtor who would be able to save you money anyway, thereby making full commission justifiable.
If you want to find a buyer agent who works on a fee structure instead of commissions, use the website of the National Association of Exclusive Buyer Agents: www.naeba.org [3]
Buying a home is one of the biggest financial transactions most people will make. Buying an apartment is an even bigger transaction. Work with a realtor you trust so you can find the best investment property.
How Long Does it Take to Close a Multifamily Property?
It takes a long time to close any real estate property, so you could imagine that the process would be even more complex and time-consuming when it comes to a multifamily property. Aside from the literal investment that you are putting in, you are also investing time and energy throughout the process. It involves tons of paperwork and weeks, if not months, of waiting.
The good news is that your realtor will help make it easier for you by managing the paperwork and everything else involving the deal. Just set your expectations properly and keep in mind that it typically takes a long time to close a home.
The amount of time it takes to close a real estate property will depend on a number of factors such as location, the type of real estate, and whether or not you are taking out a loan for it. It is possible for a property to take longer than 42 days to close. This is especially true for condominiums and multifamily properties. This process will go through different stages like contract negotiations, appraisal, interviews, etc. In some cases, closing a property may take 60 to 90 days. [5]
If a property’s appraisal came in at value, it may take about two weeks to close the house. But if the asking price comes in over- or under value, it will take longer because the complication needs to be sorted out. This means more paperwork and more communication between the parties involved.
Buying the property with cash can speed up the process significantly. This is because an all-cash approach eliminates the mortgage process and appraisal. This should take two to three weeks out of the equation, allowing the property to close quicker. Similarly, getting all the paperwork in order at the start of the buying process can speed up closing. [5]
Work With BAM Capital for Multifamily Real Estate Investing
Buying an apartment complex as a real estate investment is already a big commitment. It doesn’t have to involve that much work. There is another option for real estate investors—and you don’t even have to work with real estate agents at all.
If you want to work with a multifamily real estate team that can run the whole operation for you, talk to BAM Capital.
BAM Capital offers multifamily syndication. This is a type of real estate investment that allows you to enjoy the benefits of owning real estate without the stress and headaches of being a landlord. You don’t have to spend all that time looking for the best real estate agents or the best apartment complex to buy. All of this is done for you when you go into multifamily syndication.
But first, what exactly is multifamily syndication? Multifamily syndication is a type of real estate investment wherein multiple investors pool their money to purchase a single property. This can be done with any type of real estate, but usually it is done with real estate properties that are too expensive for a single investor to buy. This is why multifamily real estate is popular for syndication. [6]
Multifamily real estate properties are perfect for syndication. They often generate consistent cash flow which is beneficial for all investors involved in the syndication.
Here is how it works: a syndicator, also known as a sponsor, locates the deal and secures financing for the property. They then look for investors to participate in the syndication. These investors will then provide most of the capital in exchange for equity and money from the cash flow. Passive investors can earn profit from appreciation, cash flow, and equity build. This setup allows investors to participate in real estate investments that they otherwise would not be able to.
The best part is that the syndicator also takes charge of managing the property once the deal has closed. This means investors don’t have to become a landlord even if they own the apartment building. Either the syndicator will manage the property or hire a third party property management company to do it on their behalf. This makes multifamily syndication a true passive investment. [6]
Syndication is a great option for investors who have been turned off by the idea of running an apartment, managing tenants, handling emergencies, collecting rent, etc. You don’t have to do any of that. So even if you don’t want to do all of that, you can still enjoy having a real estate investment through syndication.
There is no shortage of ways to invest in real estate. But multifamily syndication may be the best one. Do keep in mind that most of these syndication deals are only open to accredited investors. However, there are a few syndications that may be open to other investors as long as they have enough experience and knowledge regarding real estate investing.
In terms of exit strategy, it usually involves selling the property at some point in the future—somewhere around five to 10 years down the road. The goal is for the equity received by investors to be more than their original investment.
BAM Capital is an Indianapolis-based company that negotiates the purchasing and financing of high quality multifamily properties in the Midwest, on behalf of its accredited investors. Prioritizing Class A, A-, and B++ multifamily properties, BAM Capital uses a vertical integration model to mitigate investor risk and create forced appreciation. This syndicator is known for its unmatched expertise and transparency. BAM Capital will handle all steps of the investment life cycle, from purchasing to remodeling to management so that investors can enjoy a high return. [7]
Working with BAM Capital makes it easier to invest in multifamily real estate. This syndicator has a consistent track record and a solid business plan. In fact, BAM Capital currently has over $700 million AUM and 5,000+ units.With BAM Capital, you no longer have to spend hours and hours looking for the perfect realtor to guide you through your next investment. The syndication approach makes everything much easier for accredited investors who want to purchase an apartment complex with other passive investors. Schedule a call with BAM Capital and invest today.
Sources
[1]: https://www.homelight.com/blog/investor-friendly-realtors/
[2]:https://assetsamerica.com/multifamily-realtor/
[5]:https://www.apartmenttherapy.com/how-long-does-it-take-to-close-on-a-home-36658609
[6]:https://www.millionacres.com/real-estate-basics/real-estate-terms/investing-multifamily-syndication/
