A multi-unit dwelling is an excellent way to buy your first home while also possibly earning an income from the investment. You can achieve this by purchasing a duplex, triplex, or fourplex home. These types of dwellings often are similar in price to a single-family home, and they are also small enough to manage on your own. The following guide can help you get started on this journey.
Research the market
You will want to research neighborhoods and schools just as you would when buying a private residence, but you will also want to check out the rental market. Are similar units renting quickly in the area you are considering, or are rentals sitting empty? A homebuyer's market is not always a good rental market, so you will need to find a neighborhood that provides the best of both worlds.
Check the rental prices
To determine if a place is a good deal, you need to find out what similar units are renting for in the area. Then, you will need to contrast the rental cost with the monthly mortgage cost. In a perfect scenario, you want to be able to bring in more money in rent than you are paying out in mortgage. Since you will be living in one unit, though, it is acceptable if the mortgage payment is slightly more than the amount you bring in from rent. As a general rule, the amount you would earn from renting out all the units—including the one you live in—should be more than the mortgage payment on the property, though.
Make sure you can afford the payment
Although you will be counting on rent payments to offset the mortgage, you need to be able to make the whole payment if necessary. There will be months when the unit is empty or when the tenants are late with rent. You don't want to risk your credit rating or chance foreclosure because you purchased more property than you could afford.
Get a pre-approval
Pre-approval is a must, especially if you are a first-time buyer looking at non-traditional properties like a multi-unit home. The best place to start with pre-approval is at your bank, credit union, or with a dedicated mortgage lender. They can help you fill out the pre-approval paperwork and give you a hard number so that you know exactly how much home you qualify to buy. This will make the shopping process easier as well, since you can confidently rule out any properties that are priced out of your range.
For more help, contact a real estate agent or mortgage lender like Doolin Security Savings Bank in your area.
Share19 October 2016
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