28) 3 Key Points When Evaluating Property
When beginning to evaluate land for a multifamily development, it can be quite overwhelming the first few times as there are many factors to take into account. Although there are many details to be scrutinized when considering investing in multifamily, and all attributes should be thoroughly analyzed; there are three key points that can help you make an informed decision. They include the location, condition of the property, and the comparables (comps).
The following article will focus on how to evaluate undeveloped land for future use as multifamily. Additionally, check out 4 Terms That All Real Estate Investors Should Know to learn more about important factors to consider when investing in real estate.
A good location is imperative for a successful multifamily development and can make or break the entire project. Some things to consider when looking at a property are utilities and crime rate. Factors such as these can drastically change the outlook of any prospective deal. These factors can become large headaches if not taken into account and cost you not only financially, but also substantial delays in the project development phase.
The condition of the property is very important and if you are unaware of certain characteristics of the site, it can disrupt the timeline or even hinder the process of using certain loans or building on portions of the land. Condition mainly concerns the physical features of the land such as flood plains, wetlands, pipelines, easements, etc. There are many other examples but keeping an eye out for these factors are definitely worth the extra effort.
Comps are important to be able to properly evaluate a location to develop and are an invaluable tool. The multifamily comps in the area will give you an approximation of the current market rent in the area and allow you to evaluate what development would work best. They can also help you decide on certain features and amenities to include, but do not copy and paste, as they are very much an example of what you should not incorporate as well.
These are some factors that should be taken into consideration when looking for property to develop. Although this list is not exhaustive, it is a good starting point to help weed out many properties that may be a larger problem than they are worth. For many other articles about Investing and Multifamily check out the Resources Tab and Let’s Grow Together!