Since multifamilies are investment properties, calculate the current income of the property. Make sure your potential income exceeds your monthly costs, including multifamily mortgage, utilities, taxes, property management, repairs, and ongoing maintenance, such as lawn care or snow removal. You'll need to be comfortable collecting rent from your tenants in person and be prepared to face the possibility that they won't pay on time or at all. Your late payment or non-payment can affect your cash flows and your ability to pay your mortgage if you rely on rental income to cover that cost.
Multifamily investment differs greatly from investing in a single family or in condominiums. The obvious advantage is that it allows you to generate multiple revenue streams while generating a constant appreciation of value. Instead of buying a single unit that you can rent, you'll buy an entire house or apartment building. You can choose to live in one of the units and use your income stream from rental units to reduce or even eliminate your housing costs.
The next step is to evaluate the property as a whole. Investors should consider the number of units in the property, including the number of rooms in each unit. Beginning investors should start their real estate search focusing on three types of multifamily properties. These include duplex (two units), triplex (three units) and quadruplex (four units).
These properties offer the biggest advantage with the lowest risk for beginning investors and are generally more affordable. If you're planning to rent to an extended family member, you might be able to get creative about how the space is divided up. If you are buying a two-family home with another family member or friend, both of you will be responsible for the mortgage. If investing in a multifamily property is right for you, it will require investors to think creatively about its obstacles and devise strategies to buy a multifamily property without money in a way that works for you.
