How Multi-Family Real Estate Investing Can Help Increase Income Streams

With Percy Nikora, Co-Founder

When you start looking at multifamily, that's a whole different ball game. You've got to make sure the due diligence is done. When you start getting into having these- building out the team, it takes a little more time. Like I said, it took us, I'd say, a good two years to get to a point where we have relationships with all these different trusted vendors - the lawyers, the contractors, property managers - and understanding what works in one market versus the other.

What I mean by that is there are certain amenities in the multifamily space that you may have to provide to the tenants because all your competition is doing the same. In single-family, amenities are not that big of a deal ... Whether you have a swimming pool; whether you have a gym; whether you have a library in your multifamily property may make no difference; whether you offer assigned parking garages, all of that ... Those are all the additional revenue streams that could make a big difference.

In multifamily, when you're doing fix and flip, the end game is to say can I increase the value of the property to get it to a level that some of the comps in the area have sold? Versus, in multifamily, what you're trying to do is increase the revenue or, really, the net operating income of that property. Once you increase that, you get a 10-fold, 15-fold, 20-fold return on that money. You're really looking at what are ways in which I can increase my income streams or decrease expenses so that the bottom line of the net operating income goes up. It's a slightly different focus, and you just have to make sure that you continue to operate the property where you're maximizing the net operating income.

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