Haveyou ever thought of investing in a multifamily home? Unlike single-familyhomes, these are dwellings with more than one unit that each have their ownbathroom and kitchen. Interested in how this type of property couldpay off for you? Read on for our breakdown of multifamily homes, including howto find them in your area.
Benefitsof buying a multifamily home
Themost attractive part of investing in and renting out a multifamily home is thesteady revenue stream you can get from collecting rent. Most people living in amultifamily home are looking to offset mortgage payments by using the incomefrom renting out the other unit, says Lee Kiser, principal and managingbroker at Kiser Group in Chicago.
Thereare also tax advantages to buying a multifamily home. You can write offexpenses related to your rental income and deduct the prorated portion of themortgage interest.
Also,an owner-occupied property may be a wise choice for homeowners living withmembers of their family, such as their adult children or elderly parents. Theycan live in one of the units for a period of time and not have to fork over alltheir savings on rent or a mortgage.
How tofind multifamily homes
Searchingfor available multifamily homes is simple. You can find multifamily homesthrough a search tool like realtor.com andfiltering by property type. That’s a good place to start to see what’savailable in the town you’d like to buy in.
If youthink you could benefit from an expert’s opinion, Carol Greeley, areal estate agent in the greater Boston area, suggests you find a buyer’sagent.
Abuyer’s agent helps guide you through the search and helps you round out yourhouse wish list. They’ll also advise you on how to submit an acceptable offer.And since the seller pays the real estate agents’ commission fees, it’svirtually free for you.
Multifamilyhome as an investment
Justlike any new home, a multifamily home may be move-in ready, or it might be aserious fixer-upper. Before buying a multifamily home, you should performdue diligence and assess just how much money you’ll need to put into sprucingup the units. Make sure the home has a sturdy roof and structure, and all majorsystems like plumbing and HVAC are in working condition.
Also,remember that you’ll likely need to perform work on the units before openingthe doors for prospective tenants. A newly renovated home will attractmore tenants and allow you to charge higher rent in the long run.
Howmuch for regular upkeep?
Theinitial renovation costs are just the beginning; once you have tenants you’llhave to deal with maintaining multiple kitchen and bathrooms.
Kisersays a good rule of thumb is to expect $300 to $500 worth of annual homeimprovements for each unit. So, a multifamily home with three units will costbetween $900 and $1,500 annually for regular home improvement tasks.
Ofcourse, being handy can save money. Landlords of smaller multifamily homes mayopt to perform basic maintenance tasks themselves instead of hiring someonelike a plumber or painter. Some renters are cool with that, but others mayprefer you hire a professional to take care of home projects.
Interested in learning more? Contact Benjamin Murray to see what’s currently out in the San Diego market.