Being the landlord in a multifamily homes has many benefits. As a first time buyer you can recieve many credits and lower interest rates. Multifamily residential (also known as multidwelling unit or MDU) is a classification of housing where multiple separate housing units for residential inhabitants are contained within one building or several buildings within one complex. A common form is an apartment building.
A property manager to handle day-to-day issues for tenants and repairs could help you ease into your first apartment building purchase. Buying a multifamily homes can be an important next step for a real estate investor who had previously purchased single-family homes to rent to tenants.
Make a nest egg
Buying a multifamily home will likely mean that you won’t stay there forever. The home you purchase will likely be a duplex, triplex or quad. It probably won’t be your dream home but it can still be a great and wonderful starter home. With tenants paying you rent, you will have the luxury of having someone contribute to paying your mortgage. This will allow you to continue to make your mortgage payment while also saving money and stocking away extra funds for your dream home downpayment. Once you have enough money to buy another home, you will be able to move out, rent the unit you were occupying, and have your tenants pay your mortgage. If you maintain the property as an investment, rents will continue to rise over time while your mortgage will stay the same. Eventually, your tenants will pay off the property for you and you will own the property outright and continue to receive rent. Continue to gain income from the property or sell it off as your retirement package – it is your choice.
Their raising the rent (why can’t you)
Right now with a challenging economy, many buyers are afraid to make a home purchase. This is causing the residential rental market to be very strong. While home prices decline, rents are continuing to climb. So what does this mean? You can fall victim to having your rent go up or you can turn the tables and collect rents of your own.
You can buy (and others can’t)
Following the mortgage mess, regulators made it tougher for investors to get financing on multifamily properties. Because so many foreclosures were the result of overzealous investors, who were flipping properties, putting no money down and far exceeding their affordability; the government made steps to ensure the mess didn’t happen again. Now investors need to pay higher mortgage rates, extra points, are often required to put more than 20% down and need significant assets in the bank. What this means is multifamily properties are becoming less expensive as fewer investors can afford to purchase properties; however first time buyers have the opportunity to buy. First time buyers can get financing on properties as long as they will be owner occupiers and can get the same financing as if they purchased a single-family home.
You don’t have to be Bob Villa
Being a landlord doesn’t mean being a plumber, electrician, landscaper or roofer — it means using common sense, finding smart people and knowing your limits. Just because you are a landlord doesn’t mean you have to be a jack of all trades. When you first buy a multifamily, you don’t have to own a toolbox. It is helpful to learn some basic home maintenance tips and fix-its but ultimately pros can be hired for not that much to handle any job. You may have to learn some basic plumbing, painting and landscaping skills. No job is too big or too small for someone else.
Landlords aren’t jerks and renters aren’t freeloaders
Landlords are famous for being made into caricatures as soulless, uncaring, money-hungry hermits. There are actually a heck of a lot of nice landlords and I have met very few of the caricatures (a few but not many). There are bad people in all walks of life and the bad ones ruin it for the rest. The same is true for renters, most are responsible, law abiding, hardworking, and for the lack of a better term completely “normal.” There are horror stories of tenants having huge parties, skipping out on rent and making meth labs in the basement (never heard of one of those, ever!) but the truth is that bad tenants are few and far between. Some tenants may pay a week late depending on how their income comes in (monthly). The fact is rent-paying tenants make for much less interesting stories than terrible ones.
It can be a great experience!
You wouldn’t regret being a landlord for a minute. Through it, you can learn a few homes tricks and tips. It can help you secure a strong financial future and perhaps most importantly it can offer the opportunity to meet some wonderful people. Some renters may become great friends share great experiences that you’d never would have had if you hadn’t taken the leap to become that dreaded word called “landlord.”
Multifamily homes for sale here!
If you look in the section of “Featured Homes” on my website, you will find a multifamily homes for sale. Both are completely filled with tenants and make a great investment!