How to Find Multifamily Properties for Sale

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Written By Justin McGill

DealBloom aims to share the latest tips and strategies to help realtors, brokers, loan officers, and investors navigate the world of real estate.

If you’re in the market for new investments, you may be wondering how to find multifamily properties for sale. There are a few different ways to search for these types of properties, and it’s important to consider all your options before making a decision.

Working with a real estate agent who specializes in multifamily properties can be a great way to narrow down your search. They’ll have access to listings that aren’t necessarily publicly available, and they can help you navigate the process of finding and buying a property.

Searching online is another way how to find multifamily properties for sale, and several websites focus specifically on multifamily properties. These sites can be a great resource for getting an overview of what’s available in your area.

How to Find Multifamily Properties for Sale

Are you thinking about investing in a multi-family property? Before you dive into the process of buying multi-unit properties, you’ll need to find out if you qualify for a mortgage.

Downpayments on investment property loans are higher than on primary residences and can vary by lender.

When considering the purchase of a multifamily home that you do not plan to live in, it is important to factor in a minimum downpayment of 25%.

If you’re a military veteran, active military, or spouse of someone who has died or is disabled as a result of their service, you may be eligible for a loan through the Department of Veterans Affairs.

If you qualify, you can get a primary residence with up to four units without having to put any money down.

Investment properties (that you don’t live in) aren’t eligible for VA loans.

What is the Debt-to-Income Ratio?

Before investing in a multi-family property, it’s critical to consider your debt-to-income ratio.

Your DTI is a measure of your monthly debts compared to your gross income.

The more debt you owe, the less likely you are to be approved for a loan.

When lenders are considering giving you a mortgage, they will look at your income, expenses, and debt. They’ll also take a look at any minimum monthly payments on credit lines such as credit card bills, car payments, and student loans.

The minimum payment on your credit card will also be considered.

The lower your debt-to-income ratio, the more likely you are to qualify for a mortgage loan.

In general, lenders prefer that your total monthly debt payments (including your new mortgage payment) be less than 43% of your gross monthly income. However, the exact DTI requirements will vary depending on the type of loan you’re applying for.

If your DTI is above 45%, you’ll need strong credit such as a FICO® Score of 620 or higher.

To qualify with a score between 580 and 620, you’ll need to maintain a housing expense ratio of no higher than 38% and an overall DTI of no more than 45%.

FHA also requires a credit score between 580 and 620. If you’ve scored 620 or above on your credit, your DTI will be looked at on a case-by-case basis, but in no case will it be more than 67%.

One strategy for keeping DTI low when financing a multi-family home is to factor in the income that you expect to get from renting out the property.

To do this, you’ll need to make sure that you have a signed lease with your prospective tenant. The income from the lease can then be used to help qualify for the mortgage.

Some types of mortgages require special appraisals that factor in your rental property’s value, taking into account its number of units and rental income.

Since your rental property is reported on your tax return, you won’t be able to use it to help buy the house. You will still need to qualify for the loan based on other factors.

How to Find Multifamily Listings

In 2021, multifamily properties will be in high demand as real estate investors seek more stable investments.

So, what’s a real estate investor to do? Unfortunately, it’s becoming harder to compete with other investors who are using tax-deferred strategies like the 1031 exchange or buying for capital appreciation.

If you are primarily interested in measuring your return on capital, it will be hard to beat investors who are willing to pay more. They usually have more cash than you do, so they can justify paying more.

You’ll also need to think of ways to land projects that aren’t quite as desirable as others. This will involve knowing which types of projects are best avoided.

There are several ways that you can find the perfect multi-family property for sale.

  • Check out commercial listings on the MLS
  • Contact commercial or residential building owners
  • Join networking groups
  • Market your buying services both online and offline

A multiple listing service, or MLS, with commercial, residential, and multi-family listings, is the first resource that probably comes to mind. But being an obvious choice doesn’t mean it’s the best.

The MLS can give you a general idea of where multifamily properties are available and at what price, but they can’t tell you where the best bargains are.

If a property is already being marketed through an MLS, that means the owner is probably already getting offers—which means they likely won’t accept a lower price.

You’ll need to find a real estate agent who specializes in multifamily properties and has access to the Multiple Listing Service (MLS).

You can also look for multifamily homes for sale on websites like Realtor.com, Zillow, or Trulia. Just enter your desired location and search for “multifamily homes for sale”.

Directly contacting the source of your deal—the property owner—can really help. For multi-family buildings, this involves directly contacting the apartment complex and asking if they’re ready to list.

While it may not be cost-effective to scout out buildings in person, there are more efficient methods, such as using online databases or searching public records.

The county auditor’s website is a great source of data that can be used to find information about property sales. This can be used to determine if a property might be for sale.

The date of purchase or sale of a home can be a useful indicator of whether the current owner might be willing to sell. This information can help you to focus your search on properties that are more likely to be available for sale.

If you’re interested in purchasing a multi-family home, you can start by checking out listings for apartments or homes that are available for rent. Once you’ve found a few potential properties, you can contact the property managers and ask if the owner might be interested in selling.

You can attend networking events, find a mentor, or start your own real estate business. The more you put in, the more you’ll get out.

Consider developing a local investment group or building up your personal brokerage. Creating a personal sales lead funnel ensures that you never miss a deal.

Writing blog posts, recording podcasts, or creating YouTube videos that demonstrate your real estate expertise, market trends, or your own perspective are all great ways to demonstrate your value.

As your follower count increases, you may begin to receive deals that are brought to you or that lead you to the right opportunity.

Best Websites to Find Multifamily Properties

If you’re looking for a multifamily apartment, check out websites like Zillow, CoStar, and Loopnet for listings.

Some agents don’t like these sites because they generate competition and are, therefore, a direct threat to their business.

Here are five reasons why using a website to search for multi-family homes is a good idea.

  1. Early Search: These websites allow you to do your own research, rather than relying on a real estate agent or yard signs. They can also help you identify exactly what you want in a new home, as well as the price, location, and value of different homes. In addition, they can help you combat agent speak by helping you better understand the local market.
  2. Immediate Exposure: By simply putting their listings on these websites, sellers can instantly expose their homes to millions of prospective buyers. Most Multiple Listing Services do this for you, so there’s no extra work involved. This expands the pool of interested, qualified, and serious buyers, both locally, and across the country.
  3. Market Analysis: Websites like Zillow and Trulia allow buyers and sellers alike to look at neighborhood listing data, which can help them gauge the health of a neighborhood. The websites can also help them find cheap property. Finally, they can make sure their real estate agents aren’t exaggerating the qualities of a home.
  4. Avoid Agents: A sell-by-owner listing bypasses an agent, which may be a benefit to a seller if they pass on some of the cost savings to a buyer. This money can then be used by buyers to hire a buyer’s agent, which protects their best interests.
  5. Inaccurate Prices: These sites often use an algorithm that is based on tax records and little else. These often don’t incorporate your property’s unique good points and bad factors, which can impact its value. Nothing is a substitute for an in-person or virtual tour. You also want to compare comps, and, if possible, have a professional engineer review the property.

How Do You Price a Multifamily Property?

There are a few different ways to price a multi-unit property. One way is to price each unit individually based on its size, amenities, and location. Another way is to price the property as a whole based on its income potential. This method takes into account the number of units, the average rent per unit, and the operating expenses of the property.

What is a Good ROI on a Multifamily Home?

A good rate of return on multifamily properties can vary depending on the location, type of property, and other factors. However, a general rule of thumb is that a good rate of return on multifamily is around 5% to 10%.

Who Owns Most Multifamily Properties?

Most multifamily properties are owned by institutional investors, such as pension funds, insurance companies, and real estate investment trusts. These investors typically purchase properties through syndicated transactions, in which a group of investors pool their resources to buy a property.

Conclusion

How to find multifamily properties for sale? There are a few different ways to search. Working with a real estate agent who specializes in these types of properties can be helpful, and searching online is also an option. Several websites focus specifically on multifamily properties, which can be a great resource for getting an overview of what’s available in your area.

Justin McGill