Multifamily investing is a great way to build wealth and generate passive income. However, a number of misconceptions about multifamily investing can deter people from getting started. Here are four of the most common misconceptions about multifamily investing.
1. Multifamily investing is only for the wealthy.
This is simply not true. There are a number of ways to finance a multifamily investment, including loans from banks, private lenders, and government programs. You can still get started in multifamily investing even if you don’t have a lot of money saved up.
One way to finance a multifamily investment is with a loan from a bank. Banks typically require a down payment of 20-30% of the purchase price of the property. However, there are a number of government programs that offer loans with down payments as low as 3%. These programs are designed to help first-time homebuyers and investors who are unable to qualify for a traditional bank loan.
Another way to finance a multifamily investment is with a loan from a private lender. Private lenders are individuals or companies that provide loans to borrowers who cannot qualify for a loan from a bank. Private lenders typically charge higher interest rates than banks, but they may be more willing to work with borrowers who have less than perfect credit.
Finally, there are a number of government programs that offer grants and other financial assistance to investors who purchase multifamily properties in certain areas. These programs are designed to revitalize neighborhoods and create jobs.
2. Multifamily investing is too risky.
Like any investment, there is some risk involved in multifamily investing. However, multifamily investing can be a very safe investment, especially if you do your research and invest in a well-run property.
One way to reduce the risk of multifamily investing is to diversify your portfolio. This means investing in multiple properties in different markets. By diversifying your portfolio, you can reduce your exposure to any one market or property.
Another way to reduce the risk of multifamily investing is to invest in a property that is well-located and has a strong tenant base. A well-located property will be in high demand, which will help you keep your occupancy rates high. A strong tenant base means that you will have reliable tenants who pay their rent on time.
3. Multifamily investing is too time-consuming.
Multifamily investing does require some time and effort, but it doesn’t have to be a full-time job. There are a number of property management companies that can handle the day-to-day operations of your property, freeing up your time to focus on other things.
When you hire a property management company, you will need to set clear expectations and provide them with the resources they need to do their job. You should also be prepared to review their performance on a regular basis.
4. Multifamily investing is only for experienced investors.
While it’s true that experience can be helpful in multifamily investing, it’s not necessary to be an experienced investor to get started. There are a number of resources available to help new investors learn about multifamily investing and find success.
One of the best ways to learn about multifamily investing is to attend a real estate investment seminar like RE Mentor’s Multi-Family Millions Workshop. It will teach you about the basics of multifamily investing, including how to find deals, how to finance a deal, and how to manage a property.
You can also learn about multifamily investing by reading books and articles on the subject. There are a number of great resources available online and in libraries. I have written 2 books on the subject: Multi-Family Millions: How Anyone Can Reposition Apartments for Big Profits and Emerging Real Estate Markets: How to Find and Profit from Up-and-Coming Areas.
Finally, you can learn about multifamily investing by talking to other investors. There are a number of online forums and communities where you can connect with other investors and learn from their experiences.
Conclusion
If you’re thinking about getting started in multifamily investing, don’t let these misconceptions hold you back. With careful planning and execution, multifamily investing can be a great way to build wealth and achieve your financial goals.
Empower yourself and gain confidence in multi-family investing by signing up for our Free Live 2-hour Multi-Family Millions Workshop to learn about the system I used to invest in multi-family properties, which I once controlled over 8,200 units across the United States!
David Lindahl, Founder
RE Mentor
Celebrating 21 Years of Creating Successful Investors