The multifamily real estate market is booming, and many new passive investors want to get in on the potentially lucrative investments that multifamily properties offer.
In the 10 years I’ve been in the real estate business as a real estate lawyer, property manager and syndicator, I’ve seen some investors make the same mistakes over and over again. By pointing them out and discussing how they can impact a multifamily real estate investment, I’m hoping that I’ll be able to help others avoid making these common mistakes.
Mistake No. 1: Investing Emotionally
Instead of making a multifamily real estate investment based on balance sheets and merit, some investors make what I call an “emotional investment” in a property. Some investors see a property and become emotionally attached to it because it’s a beautiful new building, or because it’s located in a trendy neighborhood and they want to be a part of it.
This is a situation where emotion takes over and common sense goes by the wayside, which is a huge mistake. The problem is that emotion clouds judgment and, often, people ignore the signs that they may be overpaying for the property simply because they like it. Unfortunately, an emotional investment often ends up costing the investor money.
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