Buying a multifamily home can be a great way to get started in investment real estate. Some people even buy a multifamily home and live in one of the units in order to get attractive financing options on the property.
Before you decide if a multifamily home is right for you, consider learning the benefits of this type of home purchase.
You’ll Have One Mortgage
When you have all of your properties in one investment, you only need one mortgage. This can eliminate the logistical nightmare that can result from having multiple mortgages on various properties. If you don’t want the confusion of multiple mortgages or you don’t have the money to put down on several properties, a multifamily property may be the perfect choice.
Lower Risk of Vacancy
When you rent out a house, you have one shot at having tenants. If they bail on you, there’s no other rent coming in to help you. If you have a multifamily property, though, you may have tenants in some of the other units that could help you offset the loss you experienced with the loss of one tenant.
More Cash Flow
If you price the rent right in each of the units that you rent out, you should make much more money than your mortgage payments cost. This gives you a higher chance of more cash flow than you would receive with a single-family home. With a single-family home, you can only charge one person rent, which you can only inflate so much. With a multifamily home, you charge the rent to several people, which means that you put more cash in your pocket as a result.
Easier to get a Mortgage
You may find that it’s easier to get a mortgage on a multifamily property, especially if you live in one of the units. Your lender may even be able to get you to government financing. FHA loans, for example, allow you to borrow up to 97.5% of a multifamily property’s purchase price as long as you live in one of the units, as they consider it an owner-occupied property.
You can Have Your Mortgage Paid
If you live in a multifamily property and you charge enough for rent, you may have your entire mortgage payment covered for you. This gives you even more cash in your pocket and makes it easy for you to save up to buy other investment homes, if that’s your goal.
You Don’t Have to be a Handyman
Many people mistakenly think that you have to be a jack-of-all-trades in order to be a landlord. While you are responsible for the maintenance and repairs on the property, you don’t have to do it all yourself. If you do it right, you can hire people to do the work for you. If you find people that have rates that you can afford without dipping too much into your cash flow, you’ll come out ahead.
If you want to invest in real estate, buying a multifamily property can be a great way to get started. Many people do it, as it’s a safe way to invest in real estate. Whatever your reason for investing in it, you have the chance to make a decent cash flow and start a lucrative investment career in real estate.