There are pros and cons to purchasing a multi-family home, but the benefits can change your life. I’ll show you why.
Multi-family homes may be a good idea financially for those who can’t purchase their own home, but what if you could instead buy a primary residence and investment property all in one? Today, we’ll be talking about the pros and cons of multi-family homes, as well as how you can leverage one into a great financial investment.
What is a multi-family home? It could be a duplex, a triplex, or anything you live in and also rent out to others. It’s a popular way to bring in additional cash flow and pay down a mortgage more quickly. Let’s look at its pros and cons:
Pro 1—You’re getting help with mortgage payments. Let’s say you live in a duplex with a rent of $1,500 a month. If the other side of the duplex is being rented at that same price or higher, you’re at least having your mortgage paid for you. Now let’s say you double down and rent out both sides of the duplex—you’re now paying off the mortgage twice as fast.
Con 1—Multi-family homes can cost more. Because you essentially have two of everything in the entire duplex (bathrooms, appliances, etc.), it can cost more than a single-family home.
“If someone’s renting in your house, you’re paying off the mortgage faster and will arrive at full ownership more quickly.”
Pro 2—You can build wealth with multi-family homes. If someone’s renting in your house, you’re paying off the mortgage faster and will arrive at full ownership more quickly. After it becomes a paid-for asset, all the cash flow will be going straight into your pocket instead of the mortgage company’s.
Con 2—You’ll have to deal with tenants. While I think this may be a little blown out of proportion, it’s still a factor to consider. If you’re careful about who you allow to be a tenant, it shouldn’t be a problem at all. Don’t just take in the first person who comes along; instead, create criteria for the type of tenant you’re looking for. When you find someone who fits, you’ll know, and you’ll feel better with the knowledge that you’ve found an ideal tenant.
Pro 3—You’ll be eligible for tax benefits. I’m not a CPA, but speaking with yours can give you specific information on the amazing benefits you’d receive in owning a multi-family home.
Con 3—Vacancies can happen. When this occurs, think of it this way: You’re just paying the mortgage on your home. In the end, the mortgage is your responsibility. You’d rather have a good tenant than a bad one, so keep your criteria firm and keep looking for the right candidate in the meantime.
One facet of owning a multi-family home is that you can control rent. While apartments rates are usually dictated by the rental market itself, you can choose your own price. You’ll also have the opportunity to provide a place for college-age renters or the elderly population. Even if you rent out your home at a lower price than the market, you’re still gaining a cash flow to help pay off your mortgage more quickly.
If you’re interested in buying a multi-family home, need some questions answers, or would like further information, feel free to reach out to me. I look forward to hearing from you.