The Definitive Guide to Multifamily Asset Acquisition and Repositioning

As the real estate market in the US is now on the rise, and there is a significant increase in the need for affordable housing. Though it’s a favorable time for investors to invest in multifamily properties and expect great returns, they need to carefully tread before taking a big step such as purchasing a lot of properties. Multifamily investors must have a fair idea of the renovation and restoration and what to expect afterward. Continuing the discussion, the blog post provides a comprehensive overview of all the factors to consider before investing in the multifamily properties. Take a look.

Pre-Acquisition Evaluation

Prior to acquisition, almost every investment option may appear lucrative and promising as far as ROI is concerned. The actual worth of the investments, however, is realized after the multifamily units are either up for sale or rent, once the restoration is complete. Therefore, pre-acquisition evaluation is a crucial factor and investors must take it into account while purchasing a property. A few of the vital components of pre-acquisition evaluation investors need to consider in this stage include:

Market Study

While performing a market study, the current trends and conditions of the real estate market are worth considering in the target market. Additionally, investors need to identify whether people in that area are more interested in buying or renting households. This would allow the investors to analyze whether the investment holds any value in the short or long term, so that investments can be meticulously planned for maximum returns.

Inspection

Before putting their money on the table, investors need to hirereliable multifamily contractors to assess the anomalies in the property and estimate the efforts, timelines, and resources required to restore or reposition the asset. Once a comprehensive planning and implementation strategy are in place, investors can get a better hold on their investments.

Budgeting

A detailed estimate of the investments needs to be performed in this stage including additional costs incurred in legal and registration process.

Asset Improvement or Repositioning

This stage of multifamily renovation and restoration largely decides the value investors are able to draw from their investments, and therefore, demand undivided focus. Before taking a foot forward, it is important to understand the different grades in multifamily properties:
●       Class A - The most lavish multifamily units, equipped with facilities, such as fountains, pools, barbecue areas and fitness centers, capable of attracting the highest possible rent in their respective submarkets.
●       Class B - Designed for median wage earners and are usually a step down from Class A.
●       Class C - Units with basic amenities and in a desperate need for restoration and renovation to extract optimum returns.
Crucial elements of asset repositioning include:

Roofing

Investors need to plan roofing aspects in advance including choice of material, energy efficiency demands and a strategy for preventive maintenance. This stage is important for accentuating the aesthetics of the property and safeguarding the property against leaking and weather elements over the years.

Interior and Exterior

Nothing attracts tenants and buyers more than dashing interiors and exteriors of a multifamily unit. Investors should hire reliable renovation contractors who can suggest the right renovations for the property that can attract a sizable number of tenants or buyers over time.

Functional Systems

In this stage, careful planning of aspects such as drainage, heating, cooling and energy efficiency needs to be done. Even if the renovations occupy a higher price point on the budget, occupants never mind paying more in exchange of value; so the proposition is worth considering.

Scope of Insurance Claims

Filing of an insurance claim needs to be assisted in the presence of a qualified roofing provider so that there is little to no scope of disparity. Therefore, multifamily investors should rely on professional roofing services while the assessor is assessing insurance eligibility.

The Bottom Line

There are several advantages of owning multi-family properties. These include access to easier and better financing opportunities, the ability to quickly grow one's rental property portfolio and the luxury of hiring a property manager. As a part of the multifamily renovation and restoration strategy, investors must consider renewable energy options such as solar and wind energy. Opting for such options can help in getting significant tax rebates and also gather LEED points for using eco-friendly materials.

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