The cost of owning a home has risen considerably within the past several years. The average American has much less purchasing power in the housing market than previous generations have traditionally had. For many people, renting is the only viable housing option. Because rental housing is in such high demand, there is a great window of opportunity for real estate investors who buy multifamily properties. If you are considering this type of real estate purchase, here are some of the most important things that you need to do in order to maximize the return on your investment.

Inspect Properties’ Condition Thoroughly

When you lease a rental unit for habitational use, it is imperative that it meets all applicable standards codified in local building and fire safety regulations. Statutory law governing landlord-tenant rights and remedies also commonly requires property owners to ensure the functionality of various features in rental units such as heating, plumbing, and electricity.

As you are viewing multifamily real estate listings and considering making offers on specific properties, be sure to find out exactly what type of repairs or improvements they may need. If a property has not been well maintained or requires substantial renovations to get its condition up to par, it may be necessary to make a considerable expenditure. Add the cost of repairs onto the purchase price to ascertain how much money you are going to need to put into the property before it can begin producing income.

Assess Operating Costs Discerningly

Apart from the initial investment that you have to make in your down payment and remedial as well as the ongoing payments that you may have to pay towards a mortgage, operating rental real estate can carry many expenses. Property taxes, landscaping, and property insurance are examples of operating costs that you will be responsible for paying while you are operating a property. Do some homework to find out what your ongoing obligations are going to amount to.

Analyze Your Local Rental Market 

Study local rental listings to determine how much comparable units rent for. That will give you a sense of how much revenue your property can yield.

Rather than setting rents as high as possible, aim for a good middle ground. Trying to charge the maximum potential rent someone may agree to pay may backfire. It could take longer to rent units, and good tenants may not stay on long.

Ultimately, understanding exactly how much owning a property will cost you and how much it can make you is essential. The right due diligence will help you make a smart investment.