If you’re looking to start a wealth-building program, investing in a large multifamily complex can be the first stepping stone. The nature of these properties is such that you can cover your mortgage, maintenance costs and still have a lucrative income if you have a well-run property. People breaking into the rental investment market may find the first months or years management intensive until they have amassed enough investments that make a management company feasible. Property ownership and management on this scale can be challenging, but the financial rewards can be well worth the time and effort.
While the mortgage on these properties is large compared to a single family home or a smaller multifamily residence, such as a duplex, the rent from the units can more than cover it. Also, the aggregate of all the rent can cover maintenance costs and have enough left over for the property owner to live on.
Eventually, your property can bring you more than just rental income. With refinancing, tax-deferred exchanges, etc. the equity on a property can be used to invest in another property; thus building your wealth to the point where you can leave the day-to-day details in the hands of a property manager. This kind of investing is what can start you on your path to prosperity.
Management of large multifamily properties can be quite intensive. It seems like there is always someone whose toilet has backed up or who is having a dispute with a neighbor at inopportune times. With regular building maintenance, clear rules and careful tenant selection, management problems can be controlled. If you are living on the property, it can help keep disturbances to a minimum.
Once you have achieved enough property investments to make it worth the expense, you may want to invest in a property management company. Such companies make owning properties much easier, as you will no longer be responsible for addressing the various problems of your tenants. A management company that is well-established also has the legal papers and experience to make the selection, rental to and, if necessary, eviction of tenants as hassle free as possible.
Your multifamily property can be the source of a significant portion or all of your income, as well as the starting point of a very good income. If you are willing to work hard and deal with your tenants fairly and firmly, this might be a great place to begin your wealth building strategy.