Treat You Multi Family Real Estate Like A Business
And It Will Be An Easy Business To Sell
Multi family real estate ownership is a great business! I only have to draw upon my own experiences to realize this, but I am sure that there are plenty of apartment building real estate investors who would agree.
Did you notice that I said "real estate business" and not "real estate investment". Why? Understand that if you really want to make extraordinary returns (ie. millions of dollars) in multi family real estate buildings, you must treat your properties as businesses. Especially in the beginning when you are in serious growth mode.
When I am looking at purchasing an apartment building, it is typically the properties that have the most problems that also have the most potential upside. Apartment property problems can range from 'bad' tenants to physical problems with the building (extensive deferred maintenance) or the land (ex. environmental problems). Turning these types of commercial properties around typically takes a hands-on approach from the owner. A business approach if you will.
This is not to say however, that you have to be the one painting suites and landscaping the property. What it does mean is that you must be steering the ship. Budgeting for repairs, working with you manager(s) to put together a marketing program to attract better tenants, increasing other revenue sources (besides rental income) etc. This all takes time, money and a lot of work not unlike any business for that matter.
Is it worth it in the end? Absolutely. Once you've got your multi family real estate business running smoothly, not only does it run almost on autopilot, (unlike most other businesses), it is extremely saleable. Well-run apartment buildings that are in good condition are easy to sell. Especially compared to a 'traditional' business.
Here's an example.
Across the street from 'one' of my banks (always deal with more than one bank) is a little magazine shop. It has been there since I started using the bank, which is about 14 years ago now. In fact I bet that little store has been there much longer. It sold a much larger selection of magazines than you would typically find at the grocery store or corner market, and thus, I suppose carved out its little niche based on selection.
Well, last week when I went to the bank I noticed there is now a flower shop in the space, which got me thinking. The owner of the magazine shop likely ran that business for the past 25 years or so and then, in the end, basically walked away empty handed. No equity. Nothing.
Compare that to owning even one multi family real estate property. After 25 years you would be sitting with an asset that is worth many times more than you paid for it, and it would continue to pay you cash month after month for... forever? Why not! And after 25 years you are likely mortgage free on it. The cash flow would likely be substantial, and your business, unlike the magazine shop, would be highly saleable.
If it were possible, the owner of the magazine shop should have purchased the retail space where the store was when they started 25 years ago. Had they done that, at least they would have something to sell now.
So remember, treat your multi family real estate like a business, and you will find it is the easiest type of business to sell.
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