When it comes to real estate, one of the most common goals is to invest in multi-family properties. After all, the ability to collect rent from several tenants has a chance to be seriously lucrative, right?

Well, there is more to the process than you may have realized. Here are a few things to consider before investing in a multi-family property.

Condition

Perhaps the most important aspect of investing in a multi-family property is the condition. Everything must be evaluated, from the roof to the heating and air, the electrical to the plumbing, the windows and walls to the foundation.

It should also be fully expected that there will be improvements or repairs needed within the near future. This should be analyzed with an anticipated timeline so investors can know when the property will be ready and at what cost.

Location

The old saying in real estate is, “location, location, location.” That is very much true as the location of a property can not only drastically impact the purchase price but the lucrative potential that the property possesses.

Finding areas that are either popular or rising in popularity are crucial. The lower the traffic, the less potential for tenants, which also means less rent to be charged per tenant. Do your homework on location before making a potential purchase as it can have a huge impact on the overall value of the property.

Vacancy Rates

When purchasing a rental property, it helps to know what the average vacancy rate is. Anything more than 7-8% vacancy generally means that it is either in need of renovations or in an unfavorable market, if not both.

The vacancy rates are at least a good indication of what it will be like filling those spaces and what might need to be done to lower the vacancy rate. Sometimes it can mean spending more than comfortable to hit those rates, which means finding a different investment opportunity. Perhaps the single most important piece of information available.