CREPN #77 - How to Invest in Long Distance Multifamily with Reed Goossens

Successful investing in real estate takes knowledge, guts and a leap of faith.  How much more is required to invest in long distance multifamily?

What are the key indicators Reed looks for to be successful in long distance multifamily?

His engineer training provided the basic analytic skills to establish minimum requirements for his  investments.  Here are the starting requirements he has established that must be in place in order to proceed:

• Metropolitan Statistical Area MSA must have a minimum of at least 350,000.  This establishes basic population that ensures there are people that need housing.

• Population growth: a positive trend for the past ten years

• Employment opportunities of at least three major employers.  Jobs for your tenants so they can pay your rent.

• Moderate CAP rates.  Ideally they are 8 or greater.  If CAP rates are compressed, it makes it very difficult to purchase a property with leverage.

• Rents as a percentage of average income.  If rents are 25 - 30% of average income, then there is typically room to increase the rents.  If rents approach 40 - 45% of average monthly income, the opportunity to increase rents is significantly reduced.

Once you have your parameters set, Reed suggests you analyze at least fifty deals to gain the experience and local knowledge needed to recognize a deal when it presents itself.

For more go to:

http://www.rsnpropertygroup.com/

Listen to Investing in the U.S.  An Aussie’s Guide to US Real Estate