7 Mistakes to Avoid in Multifamily Investing 2025
“It’s good to learn from your mistakes. It’s better to learn from other people’s mistakes.” – Warren Buffett
After decades in multifamily real estate, I can say with absolute certainty: the right move at the wrong time—or with the wrong team—can cost you dearly. Whether you’re a seasoned investor or just getting started, the multifamily game is about execution and avoiding pitfalls that can sink your portfolio before it even begins.
Let’s dive into the seven most common mistakes I see investors make (yes, even the experienced ones) and how to sidestep them in 2025 and beyond.
Multifamily real estate is not a solo sport.
Success hinges on surrounding yourself with professionals who are not just competent, but aligned with your vision. Your team should include a savvy real estate attorney, CPA with real estate experience, an investor-friendly mortgage broker, a trusted property manager, and a broker who knows the submarket cold.
Mistake: Rushing into deals with unvetted partners or “discount” service providers.
2025 Tip: Vet every player thoroughly. Ask potential property managers for their rent collection rate and tenant retention average. Interview multiple lenders. Cross-reference referrals in investor communities like our Multifamily Facebook Group.
Hot deal alerts and brokers waving “off-market” flags are tempting—but distractions kill discipline.
Mistake: Straying from your target market, asset class, or ideal deal size because a deal looks too good to pass up.
2025 Tip: Lock in your buy box. What class of property are you targeting? What market or submarket are you focused on? What minimum cash-on-cash return do you need? Revisit this monthly and say “no” to anything that doesn’t fit.
Due diligence isn’t a formality—it’s your firewall against disaster.
Mistake: Failing to verify rent rolls, skipping unit-by-unit inspections, or not walking every roof and boiler room.
2025 Tip: Create a due diligence checklist for physical, financial, and legal reviews. Use tools like Rentometer or CoStar to cross-check market rents. Run a forensic audit on the last 12 months of expenses, and walk every unit if possible.
Bonus: Watch my full due diligence breakdown from a 48-unit deal on our MultifamilyCommunity.com livestream archive.
Vacancy isn’t just about empty units—it’s about missing income.
Mistake: Looking at occupancy alone and assuming the property is fully performing.
2025 Tip: Always ask for the T12 (trailing 12-month income/expense report). Cross-check that with concessions, bad debt, model units, and any non-paying tenants. A 100% occupied property might still be bleeding cash if half the tenants are months behind.
Formula Refresher:
Economic Vacancy (%) = (Potential Rent – Actual Collected Rent) ÷ Potential Rent
CapEx and maintenance reserves are non-negotiable.
Mistake: Failing to raise or set aside enough funds for roofs, plumbing, HVAC, or deferred maintenance.
2025 Tip: Always get a PCA (Property Condition Assessment) from a licensed inspector. Budget at least $250–$500 per unit per year in reserves, depending on age and condition. And when in doubt—overestimate, not under.
Remember: Your lender might require escrow reserves. Don’t get caught off guard during underwriting.
If appreciation is your exit strategy, you’re gambling—not investing.
Mistake: Buying based on future value projections without solid income today.
2025 Tip: Stick to value-add properties that cash flow on Day 1. If it appreciates, great. If not, you’re still profitable. Underwrite conservatively with today’s rents—not tomorrow’s potential.
Quick Filter: If your cash-on-cash return isn’t at least 6–8% year one (with reserves included), it’s probably not worth the risk.
Multifamily is a momentum game, but momentum takes time.
Mistake: Buying a negative cash flow deal assuming you’ll “turn it around in 90 days.”
2025 Tip: Unless you’re buying deep value-add with a full CapEx plan, don’t rely on rent bumps to make your deal work. If you must, have at least 6–12 months of operating capital on standby to survive the repositioning period.
This business is 80% mindset and 20% mechanics.
Mistake: Thinking you can muscle through without mentorship or personal growth.
2025 Tip: Invest in your mindset as much as your deals. Read daily. Surround yourself with other driven investors. Join mastermind groups. Keep your energy and discipline high—it’s the #1 multiplier in your business.
Build a rock-solid team before buying
Stick to your investment criteria
Perform thorough due diligence—always
Watch economic vacancy, not just occupancy
Budget for CapEx and set aside reserves
Buy for cash flow, not for appreciation
Don’t overestimate turnaround timelines
By steering clear of these traps, you’ll protect your capital, grow your portfolio faster, and sleep a lot better at night.
Want to go deeper? Download my free guide: 29 Mistakes Most Apartment Investors Make—and How to Avoid Them.
Listen to expert interviews and field-tested strategies on the Lifetime CashFlow Through Real Estate Investing Podcast.
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