Buying a multi-family home can be a great investment opportunity, but that doesn’t necessarily mean it’s a great option for everyone. Though owning this type of property has several advantages, some people may feel that the downsides do not outweigh the benefits. It all comes down to whether you have the funds to purchase a multi-family home, as well as the desire to take on the additional responsibility.
Here are a few things to consider when contemplating the idea of purchasing a multi-family piece of real estate:
Earning extra income is the most obvious benefit of buying a multi-family home: You bring in more money each month through rental income and can use that additional capital to pay off any loans you may have, splurge on a dream vacation, or save it for a rainy day.
If you own a multi-family property, you have the ability to write-off certain expenses. According to Zacks Investment Research, owners of the rental properties they also occupy are privy to certain tax deductions. To find out what might apply to you, get in touch with your accountant for more information.
But here’s the downside:
There are significant financial perks to owning a multi-family home, but with more money comes more responsibility. Being a landlord becomes your second job. When the heat goes off or the stove in one of the units stops working, you are the person your tenants will call in the middle of the night—and you have to deal with it. This is one reason why you should try to find a place close to your residence if you aren’t already living in one of the units—you don’t want to drive an hour both ways whenever an unexpected problem arises.
Some neighborhoods have more multi-family properties than other communities. For example, college towns are swarming with students who choose to live off campus in rental apartments. So, if you’re looking to purchase a home so you can live in one unit and rent out the other(s), you need to determine where people are looking to rent and decide whether you would want to live in that neighborhood yourself. It might not be right for you.
Find out more about our multi-family financing options here.