It’s a hot real estate market. With more and more people realizing the benefits of real estate ownership as an alternative to the stock market or as a way to diversify portfolios, demand for properties is higher than ever. Throughout Massachusetts, multi-family homes are selling quickly and for top dollar. Here are the basic steps to buying a multi-family in Massachusetts this year.

1 – Hire an Agent

Your very first step is to hire an agent who specializes in multi-family properties. Beyond the obvious reason of having representation and receiving advice from someone who understands investment properties, you might also gain you access to off-market properties. Unlike single family homes, multi-family property owners don’t always publicize their listings right away. Many try to limit exposure to their tenants and will ask agents to privately source buyers. They’ll often select an agent who specializes in multi-families and therefore already have established relationships with other investors. These off-market opportunities represent are extremely important, especially when listings are scarce in the open market.

2 – Get Pre-approved

Properties sell quickly and you’ll miss opportunities if your finances aren’t in order. Before viewing any properties, get a pre-approval. By providing your lender with information on your income, assets, and debts, you’ll learn your approval limit and can focus on the right properties. You’ll also receive a pre-approval letter to submit with your offer.

3 – Find a Property

With such low inventory, staying up to date is essential. Ask your agent to send automated daily email alerts on any new listings. Inquire right away on properties that interest you. Showings are typically limited to reduce tenant inconvenience so you may miss scheduled showing/tour dates if you wait. Many properties will limit showings to qualified buyers, which makes step #2 above even more important. Evaluate cap rate, cash-on-cash return, etc. using the tools on our website. Your diligence will allow you to act quickly when the right opportunity arises.

4 – Secure Financing

Once you’re under agreement, it’s time to secure financing. Email the signed purchase contract to your lender. They will send you disclosures which you should promptly review and sign. This authorizes the lender to move forward with your application, which includes the important step of ordering an appraisal. You will also be asked for a wide range of paperwork on your income and assets. To expedite your loan approval, promptly reply to requests from your lender.

5 – Close

Once you receive a clear-to-close from your lender, it’s simply a matter of waiting for the closing date. A closing disclosure will be sent to you a few days prior. Your closing attorney will also be in touch with instructions for wiring funds and signing documents. Many attorneys have COVID precautions in place so they may review documents with you virtually before the physical signing. Once closing documents are recorded at the Registry of Deeds, your purchase is final.

More on Buying a Multi-Family in Massachusetts

Buying a multi-family in Massachusetts is a great way to invest in real estate and build your wealth. To protect your investment and landlord rights, be sure to abide by Massachusetts landlord-tenant laws. If this is your first investment property, be sure to download our pamphlet on 50 Things Every Landlord Should Know.