The concept of a multi-family property isn’t exactly new. In technical terms, a structure with more than two separate living units counts as a multi-family property. Over the years these types of homes have propelled a shift in culture in the country for both homeowners and property investors. A recent report by JLL showed how multi family home starts were far outpacing the single family houses being constructed in the U.S. since the financial crisis.
But why are these types of properties in favor and how does it make financial sense to buy multiple homes rather than a single unit? Here’s what you need to know:
Like other investments, a certain amount of cash is needed to get things rolling. But with a property you could start on the investment ladder with the one you live in. Find one online, get an online conveyancing quote and settle the price to get started. But in a single unit you won’t have a regular flow of cash. This isn’t a big concern if you’re a multimillionaire with a well-diversified portfolio, but for the rest of us the extra cash comes in handy while paying the mortgage off.
State and federal regulators understand this and have made it remarkably simple for people to purchase multifamily properties that are ‘owner-occupied’, with little to no down payment. Even the qualification guidelines for mortgages are less stringent.
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Some things you should know:
- Like other property investments, multi-family units are very ‘hands-on’ and you will either need to hire someone to look after the property or do it all yourself.
- Hiring a professional management firm is great if you need some assistance, but these services don’t come cheap and even if you can afford them, they will reduce your long term capital gains.
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