Not All Residential Real Estate is the Same
The Multifamily real estate market remains HOT. And with financing widely available, interest rates relatively low, rents at all-time highs and rental demand at peak levels and rising, it’s easy to see why more and more investors are being drawn to this exciting segment of the market.
While multifamily properties can be great investments, there are pitfalls to which unwary investors can fall prey.
The purchase or sale of a single-family home, condominium, or even an owner-occupied two-flat can be considered relatively routine, but the issues that need to be considered, evaluated and addressed in apartment building transactions are significantly more varied:
A standard form contract typically used for residential real estate transactions will rarely serve you well in a multifamily deal. A custom contract, detailing all the specifics related to the property and drafted by experienced counsel, is the best way to ensure your interests are covered.
Before beginning a multifamily transaction, it’s best to consider the type of ownership structure most favorable for you. A lack of knowledge, coupled with insufficient planning, could result in setting off a negative chain of events.
Too often, agents and attorneys approach multifamily deals like standard residential ones, and list you or your existing company as the buyer. This is rarely the best approach for commercial transactions like multifamily purchases.
That’s why it’s essential your counsel has experience determining what type of entity to use, and whether and how you should establish a new entity or use an existing one.
If your attorney is not well versed in landlord-tenant law, you could be put at significant risk when acquiring properties with standing leases and existing tenants. And with the unprecedented number of changes in local landlord-tenant laws in just the past two years, that risk has become even greater. If your multifamily deal isn’t thoroughly vetted, you could be facing backlash for months — even years — after the closing.
Multifamily investing can be very lucrative. And, like most things, relies on having the right team in place to help. Hiring an attorney who knows and understands the many nuances involved in multifamily property transactions will likely save you lost time and money.
At Erwin Law, our team delivers a full complement of real estate and related services to our real estate investment clients. We know and have, for the past 30 years, worked these deals from all angles, and can help protect your interests from beginning to end.
If you’re looking into multifamily opportunities, start smart. Call James Erwin at 773-525-0153 or visit our website: www.erwinlawfirm.com.