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How to Find Multifamily Properties for Sale in December 2024
Learn how to find multifamily properties for sale. Go beyond MLS listings with our comprehensive guide.
- Finding Your Ideal Multifamily Investment Property
- First, Know What You’re Looking For
- Where Are You Looking to Invest?
- How Much Will You Invest?
- What Class and Size of Property Do You Want?
- What Do You Want to Avoid?
- Ways to Find Multifamily Property Listings
- 1. Use an MLS
- LoopNet
- ApartmentBuildings.com
- CREXi
- Others
- 2. Work With a Multifamily Broker
- 3. Contacting Building Owners Directly
- Other Methods for Locating Suitable Investment Properties
- Related Questions
- Get Financing
Finding Your Ideal Multifamily Investment Property
If you’re reading this article, you probably already know that multifamily investing is an incredible way to build long-term wealth. In fact, I'd say there’s a good chance you already own one or more multifamily properties of your own. However, you might be struggling when it comes to finding your next investment property. I’ve put together this quick (and comprehensive) guide to help you find the best property for your individual needs.
First, Know What You’re Looking For
Maps are great, but if you don’t know your destination, they aren't particularly helpful.
The same can be said of this guide: If you don’t know what type of investment property you’re looking for, your search process is unlikely to yield the results you’re looking for. So, before anything, try to answer a few of the questions below:
Where Are You Looking to Invest?
This could be one or more markets, as well as several submarkets within them. It’s important to keep in mind, that, when it comes to finding the areas with the best potential for rent growth, submarkets are often more important than markets.
If someone tells you that Austin isn't a good place to invest anymore, take it with a grain of salt. Maybe there are fewer good deals, but that doesn't mean there are no good deals. Assess every submarket in the context of the wider market, sure, but it's usually not helpful to rule out specific markets based on trends that may not be true at the submarket level.
Of course, the same holds true for a "good" market. Sure, Indianapolis may look attractive for a lot of reasons, but there are plenty of submarkets that are underperforming.
How Much Will You Invest?
If you’re planning on investing alone, this could be a very specific number (e.g., you’re willing to put down $500,000 with the goal of purchasing a $2 million apartment building).
However, if you’re planning on investing with partners (or even engaging in an apartment syndication deal) this number may be much more flexible, depending on the potential profitability of the property and how interested your other investors/partners are in the deal. Pro-tip: Use Janover Engage to find your next syndication investment at no charge.
What Class and Size of Property Do You Want?
Different types of investors have different interests and skills, and therefore tend to gravitate towards different property classes (with different multifamily investment strategies).
For instance, an investor interested in distressed properties would generally look towards Class C buildings, while a value-add investor might gravitate towards Class B properties. The number of units you want in a property is also an important factor to look at. However, it will generally be limited by your budget and the quality of the property you want to acquire.
What Do You Want to Avoid?
In addition to what you want in a multifamily property, it’s also important to understand what you don’t want. Potential red flags could include delinquent taxes, being located on or near a busy intersection, or a property with multiple current tenants that are late on their rent. Maybe it sounds obvious that you don't want these things with a property investment, but for some investors here's where significant opportunity can be found.
Ways to Find Multifamily Property Listings
Now that we’ve gotten the first part out of the way, how do you find the right multifamily property for you? I'll review each of these ways below.
1. Use an MLS
Using a commercial or multifamily MLS, or multiple listing service, is the obvious way to find suitable investment properties to purchase — and it's often incredibly effective. Most commercial multiple listing services will give you a great idea of the prices and selection in a particular geographic area.
However, using an MLS to find an apartment property may not help you discover the best deals, simply due to the fact that, if an owner (or owner’s broker) is utilizing an MLS, they’re already committed to marketing their property and will often demand a higher price. In fact, the best deals may be so-called “off-market” deals — e.g., those that are not (or have not yet) been listed on an MLS. Despite that, looking at MLS listing is still an effective way to begin the property search process.
Some of the top commercial MLS services include:
LoopNet
Generally considered the largest and best known commercial MLS, LoopNet currently has approximately 8 million registered members and 12 million monthly visitors. The service is owned by CoStar Group, which acquired it in 2012.
ApartmentBuildings.com
ApartmentBuildings.com is a solid service, as it only lists apartment buildings and no other types of commercial property. While it used to primarily capture only a number of specific markets in the South and Southwest, today the service has a large number of listings nationwide.
CREXi
CREXi launched in 2015 and has quickly become a large MLS rivaling LoopNet in many ways. The service as of the date of this update (July 22, 2024) has more than 2,300 active listings nationwide.
Others
Other options include Realtor.com, Point2Homes, and Trulia, though these services mainly focus on marketing single-family properties instead of apartment buildings. That said, it's pretty common to find smaller multifamily properties here, too.
2. Work With a Multifamily Broker
There’s often significant value in directly contacting commercial brokers, which can easily be found via an MLS or even just a simple Google search. You don't need to use a broker attached to a listing you found on an MLS — you can always contact them and ask if they could assist you in your search. While it sometimes may take a while to find brokers who can help, they can be an excellent source of potential multifamily deals — for the deal you're after now plus any more you're looking for in the future.
3. Contacting Building Owners Directly
In some situations, it pays to source a deal as directly as possible. In the world of multifamily investing, that means directly asking apartment building owners if they’d like to sell their property to you. However, unless you want to spend years driving, it doesn’t make much sense to scout out properties in person. Instead, you’ll want to be a little more efficient.
One great way to find suitable multifamily properties is to look through county auditor websites for the areas in which you are interested in purchasing property. This website should list purchase and sale dates, building information, and a variety of other data that will be useful if you want to develop a list of property owners to contact.
Pro-tip: Check out any loans on a target property. If it's maturing in the next year (which is sometimes listed in public records), the owners are far more likely to be interested in selling. Especially if there's a balloon payment coming.
You might also want to look at apartment rental listings, and then use the owner contact information listed in order to determine if they are interested in selling.
In general, you may want to avoid contacting owners who have purchased a property in the last one to four years, as they are less likely to want to sell to you at a below-market price (though you never know!).
Other Methods for Locating Suitable Investment Properties
Using an MLS, contacting brokers, and contacting property owners are just a few of the ways to find great multifamily properties. Other methods could include going to meetups, networking on LinkedIn, and finding local real estate investors to mentor you.
The more action you take, the better. For instance, if there isn’t a good multifamily investing group in your area, start one.
In addition, building your own personal brand can be an incredibly effective way to create your own pipeline and have deals come to you. Write a blog, start a podcast, or create a YouTube channel discussing your real estate experience, trends, tips, and your own unique viewpoints. Basically, demonstrate your expertise to others in the industry.
If you get a large enough following, this could lead to readers telling you about great deals, or, at the very least, offering to meet with you and connect you with brokers, developers, investors, and others that may know where to get them.
Related Questions
What are the best ways to find multifamily properties for sale?
The best ways to find multifamily properties for sale are to utilize a commercial/multifamily MLS, contact commercial brokers, directly contact building owners, and use networking groups, online marketing, and other methods.
You can source a deal directly by looking through county auditor websites for the areas in which you are interested in purchasing property. This website should list purchase and sale dates, building information, and a variety of other data that will be useful if you want to develop a list of property owners to contact. You might also want to look at apartment rental listings, and then use the owner contact information listed in order to determine if they are interested in selling.
In general, you may want to avoid contacting owners who have purchased a property in the last 1-4 years, as they are less likely to want to sell to you at a below-market price (though you never know!).
For more information, please visit this page.
What are the advantages of investing in multifamily properties?
The main advantage of multifamily investing is that it provides investors with the opportunity for a steady stream of income. With this type of investment, investors are able to rent out the units to tenants and receive a consistent, ongoing return on their investment. Multifamily investments also offer the potential for a higher return on investment than other types of investments, including single family homes, with less risk.
Multifamily properties also perform better in a recession. While different assets across the quality spectrum will behave differently, people always need a place to live. As multifamily homes generally have lower rents per unit than a single-family home, occupancy generally tends to hold steady even in a downturn.
One of the major upsides of investing in multifamily properties is the guarantee of reliable monthly cash flow from renters. Since multifamily properties are rented out to multiple individuals or families, there’s a reduced risk of vacancies — even if a tenant moves out, you can anticipate rental income from the remaining occupied units. Additionally, in a strong rental market, you will be able to fill vacancies fast, getting back to the initial, higher cash flow.
What are the most important factors to consider when buying a multifamily property?
When buying a multifamily property, the most important factors to consider are the location of the property, the loan options available, and the terms of the loan. Properties in certain areas may be eligible for certain programs or incentives, so it is important to research the area and the available loan options. Additionally, it is important to shop around in different markets to find the best deal.
What are the different types of multifamily financing options available?
When it comes to multifamily finance, there are several options available to investors. These include:
- Conventional Loans
- FHA Loans
- HUD Loans
- Bridge Loans
- Mezzanine Financing
- Crowdfunding
- Private Equity
For more information on each of these types of financing, please visit Multifamily Financing: Your Comprehensive Guide.
If you aren’t sure what type of financing or what loan terms work best for your unique deal, get quotes from us by filling in your details below.
What are the benefits of using a real estate broker to purchase a multifamily property?
Using a real estate broker to purchase a multifamily property has many benefits. A good commercial real estate broker can help you identify quality apartment properties in your area, will have a good understanding of real estate investment fundamentals, and may even be able to help you negotiate on the sale price. This article from Apartment Loans explains the benefits of using a real estate broker in more detail. Additionally, this article from Multifamily Loans provides an investor guide to buying your first apartment building.
What are the risks associated with investing in multifamily properties?
The risks associated with investing in multifamily properties include expensive purchase costs, rising construction costs, construction delays, and the possibility that the renovation work may not be enough to get the desired investment outcome.
Buying multifamily properties is significantly more expensive than buying single-family homes, therefore, it is usually hard to enter the market as a first-time real estate investor. While banks are usually eager to provide loans, buyers should be able to come with around a 20% downpayment, depending on the real estate market or the size of the property. Source
Construction costs have risen dramatically over the past few years, impacting both ground-up development projects and renovation work. Make sure you do your research and plan ahead with a strong budget before beginning apartment renovations to avoid any nasty surprises. Source
Construction delays are also an unfortunate fact of life. Due to supply chain issues, some cannot be avoided — so it may be best to take a very conservative approach in terms of your project timeline. Don’t assume you will have rents in place the month after your capital improvements are scheduled to wrap up. Source
Finally, your renovation work may simply not be enough to get the investment outcome you’re looking for. You may invest a lot of capital to add the highest-end luxury amenities to a property built in the 1980s — but if potential renters are looking for a newer building, you may not see much of an uptick in occupancy or rental revenue. Source
- Finding Your Ideal Multifamily Investment Property
- First, Know What You’re Looking For
- Where Are You Looking to Invest?
- How Much Will You Invest?
- What Class and Size of Property Do You Want?
- What Do You Want to Avoid?
- Ways to Find Multifamily Property Listings
- 1. Use an MLS
- LoopNet
- ApartmentBuildings.com
- CREXi
- Others
- 2. Work With a Multifamily Broker
- 3. Contacting Building Owners Directly
- Other Methods for Locating Suitable Investment Properties
- Related Questions
- Get Financing