You are getting ready to buy your first home and you are undecided between a single family home or buying a multifamily property. Both are good long term investments, but the difference between them is huge. Let’s have a look at the pros and cons and why you should buy a multifamily property rather than a single family home.
Affordable Prices: Real estate prices are vastly different across the country and even across states. In New York City you can spend well over a million dollars for a two family home if you can even find one. Go upstate to Syracuse and you can buy something with the same square footage for less than $200,000. However if you compare a multifamily to a single family the cost is not that different and you have the rental income to offset your costs.
In terms of a duplex or a triplex your upfront cost and financing is far easier than trying to purchase an apartment build. This makes it viable for first time homeowners to dip their toe into the real estate investment market.
Easy to Maintain: Multifamily homes only have a couple of rental units and there is far less to maintain. Often you can handle many of the repairs yourself and when things go wrong, like furnaces or hot water tanks it is cheaper to fix.
The Condition: Anytime someone is selling investment property you have to wonder why. Is it something simple like they are moving or are the repair bills getting too high? It cannot be stressed enough how important the inspection process is when buying a new property. When determining if a property is worth buying or not you need to take into account maintenance and repairs.
Cost of Utilities: The cost of heating and keeping the lights on also needs to be taken into account. Are the units separately metered? Who is paying the heat and utilities, you or the tenant? In large buildings it’s almost always the tenant who pays but in multifamily units it can vary. You may find that the building was wired for the utilities to be shared. If you don’t factor in the costs you can end up losing money every month and that you don’t want.
When it comes to buying a multifamily property it is a great idea, as long as you take the time to crunch your numbers. Don’t get emotionally attached to a house, walking away from a bad deal is in your best interest.