Buying multifamily real estate is a good idea for anyone looking to expand their portfolio. Consolidating a number of rental units under one roof makes them easier to manage and allows you to quickly grow your revenue. This is why these properties are in such high demand.
Teletare has a wealth of experience in commercial real estate and offers a wide range of multifamily buildings for sale in King County. We regularly have over 50 multifamily properties listed on our website in neighborhoods like Fremont, Queen Anne, East Lake, Mt. Baker, North Admiral, and West Seattle. By using the search function on our website, you’ll be able to quickly find a property near you that meets your specifications.
How to Evaluate Multifamily Properties
There are a number of things that need to be considered when looking at multifamily real estate for sale. By doing your due diligence beforehand, you’ll give yourself a much better chance at making a smart investment.
- Location: Like any piece of commercial real estate, location is key when it comes to multifamily investments. The more desirable the location is the easier it will be to find new tenants. Look for properties close to transit, shopping, and recreation areas, as this will be what most potential tenants will be looking for.
- Operating Expenses: Every multifamily property will come with a number of operating expenses. These can include fees paid to a property management company, maintenance, and insurance. Be sure to have a complete understanding of a property’s capital expenditures before investing.
- Determine the Net Operating Income: When you purchase a multifamily property you’re essentially buying a business. So, make sure you know exactly how much you can expect to earn from your investment moving forward. The net operating income can be determined by subtracting the property’s operating expenses and vacancy from its schedule gross income. This tells you how much income you can expect to generate each year.
- Determine the Capitalization Rate: The capitalization rate, or cap rate, will help you determine your expected rate of return on your investment. It can be calculated by dividing the net operating income by the value of the property.
- Rent: What are the current rents being paid by tenants and how does that compare to the market rent (rents being charged by other similar properties)? There is currently no rent control in Washington State, so you’ll be able to increase rents if you wish. However, this might make some tenants decide to move, leaving you with vacancies. You should also consider current market trends in order to determine how much you’ll be able to increase the rent in the future.
- Condition of the Property: An older property that’s in need of a lot of maintenance and repairs will lead to more operating expenses, which will cut into your profits. This is why it’s a good idea to thoroughly inspect any property you’re thinking about buying so you can uncover any potential issues.
- Vacancy: No building can be completely full all the time. However, a building that has a large number of vacancies will require additional work in order to get them filled, and it could also be a sign of other underlying issues. For reference, the national average vacancy rate is 2.4%.
Types of Multifamily Properties
When you’re looking at multifamily units for sale in Washington State you’ll have plenty of options. Here are the most common property types you’ll encounter:
- Apartment Building: Apartment buildings can vary in size. Some might just have a few units while others can have hundreds. They often include a property management company that oversees the complex and deals with any issues that might arise.
- Mixed-Use Building: These buildings include space for both residential and commercial units. Generally, the bottom floor consists of commercial spaces and the floors above contain apartments.
- Duplex, Triplex, and Quadplex: A duplex is a house that’s divided into two separate living areas. Each unit has its own entrance and there is no shared space or common areas. Triplexes and quadplexes are similar to duplexes, except they are divided into three or four units.
Investing in Multifamily Properties in Washington State
Investing in multifamily real estate is a great way to diversify your portfolio and generate additional income. However, there are some things you need to consider before jumping into the market.
Here are a few tips for first-time investors:
- Look for Properties that Already Have Tenants and a Property Management Company: One of the toughest parts of owning a multifamily property is finding tenants. If you want to make things easier on yourself, look for properties that are already full. It’s also beneficial to buy a property that already has a manager in place who’s familiar with the building.
- Start Small: If you’re new to this type of commercial real estate it’s a good idea to start small with something that only has a few units. That way you can get a feel for the business and then gradually build your way up to something larger.
- Work with Commercial Real Estate Brokers Who Are Experienced with Multifamily: Your commercial real estate broker can provide you with valuable insights on any property you’re considering buying. So, make sure you work with someone who has experience with multifamily properties and can help you make the right decision.
Find the Perfect Multifamily Unit in King County
Are you ready to start looking for multifamily real estate for sale? Our team of experienced commercial real estate brokers can help you find a property that works with your budget and provides you with revenue for years to come.