2023 is an exciting year for real estate investors. With the demand for rental properties on the rise, multifamily real estate has become an attractive investment option, providing a steady income stream and long-term returns while helping to diversify your portfolio. Moreover, financing them has never been easier, thanks to hard money loans.
If you haven’t already looked into investing in multifamily properties, now is the time! Read on to find out why they’re an excellent investment opportunity in 2023, and learn how hard money loans can help finance them.
Table of Contents
- » What is a Multifamily Property?
- » What to Look for When Investing in Multifamily Real Estate
- » Why You Should Use Hard Money Loans for Your Multifamily Investment
- » Why 2023 is the Year to Invest in Multifamily Real Estate
- » Choosing the Right Hard Money Lender
- » Summary
What is a Multifamily Property?
A multifamily property is a residential property that contains more than one residential unit: a single building that has been divided to accommodate multiple tenants. Examples of multifamily homes include apartment complexes, duplexes, condominiums, and townhouses. Of course, such a property will require much more time, effort, and capital than single-family properties, as you will likely need a property manager to maintain the building and engage with your tenants. Nevertheless, multifamily real estate is a great investment opportunity because of the high yields and steady income it can generate.
What to Look for When Investing in Multifamily Real Estate
As exciting as this investment opportunity may be, the benefits of multifamily real estate investments can only outweigh the risk if you do your homework first: find a property below market value and assess and analyze its profitability before committing to buy.
Ask yourself the following questions before investing in multifamily real estate:
» Where Is It Located?
Location is one of the most important factors when deciding to make a real estate investment. Therefore, you’d want to look for high-growth, high-yield areas of Los Angeles where properties are in demand so that you will be able to rent out every single unit of the property.
» How Many Units Does It Have?
Properties with a low number of units pose the least risk for investors and are the most affordable multifamily property. That said, the more units the property has, the more tenants you can have, increasing your revenues, even though this also means higher maintenance costs.
» What Are the Costs Involved?
The costs of the property will come down to many factors, including your financing options. Do your research to find the most attractive financing option before committing to the investment.
» What Is the Potential Income?
Based on data available (such as the rental prices in your chosen neighborhood), you also need to calculate the income the property can yield and whether that’s worth the investment. The general rule of thumb is that you should spend no more than 50% of your investment’s income on your expenses.
» Who Is the Seller?
When evaluating a real estate investment, you should also look at who is selling the property. The bank or the owner? The price will vary depending on the seller and their motivation, which is an opportunity to save on costs.
Why You Should Use Hard Money Loans for Your Multifamily Investment
Hard money loans for multifamily real estate investments are a common form of financing. Since they are distributed by another investor instead of a traditional financial institution, with this type of financing, your credit score won’t matter as much as the collateral you bring.
If you don’t qualify for a bank loan, you can still make a real estate investment using hard money loans. Hard money loans can have higher interest rates than regular mortgages, but at the same time, they are often more flexible in other areas.
Most Los Angeles multifamily hard money lenders will ask for comprehensive documentation with information about the property. Sometimes they also ask for tax records, proof of funds, and bank statements before approving the loan, but their process is still less complicated than traditional financing.
Why 2023 is the Year to Invest in Multifamily Real Estate
Home ownership is declining, but demand for rentals is rising, with a more than-ever increase in the need for single-person housing units. Given these market conditions, multifamily properties will be a great investment opportunity in 2023.
Rental price growth will eventually slow as more housing units are built to respond to demand. But for the moment, multifamily properties in high-demand neighborhoods of Los Angeles offer the potential for long-term returns and a steady income stream for investors. At the same time, they are a great way to diversify your investment portfolio.
Choosing the Right Hard Money Lender
Hard money loans are a hassle-free way to finance real estate investments. They are flexible in many areas and, unlike traditional loans, provide fast financing for your investments. However, this form of financing is not for everyone, as it carries higher interest rates than traditional loans.
Keep in mind that not all Los Angeles hard money lenders are suitable for your multifamily investment. With this type of financing, it’s important to find a reliable lender with a proven track record who can advise you on the investment you’re about to make and help you in every step of the process.
As the demand for rental housing in Los Angeles continues to grow in 2023, multifamily real estate will be a great investment opportunity. Many types of loans are available when purchasing multifamily properties. However, hard money loans are often the most flexible way to finance such an investment.
If you’re looking for reputable Los Angeles hard money lenders, you’ve come to the right place. RTI Bridge Loans has over 30 years of experience in the Los Angeles real estate market. Thanks to our hassle-free lending process, we can help you realize your investment, whether for a single or multifamily property.
If you want to learn more about how RTI Bridge Loans can help you achieve your investment goals, contact us at (562) 857-2285 or request a loan quote online. Our team of experts looks forward to finding the best financing option for your needs!