Buying a home can be a very long and stressful affair even when it comes to regular homes. The process can get very overwhelming very quickly if you’re not careful about it. This also applies to multifamily homes, except there’s even more things to keep in mind compared to normal homes. Multifamily homes, generally speaking, are a much bigger involvement than regular ones, quite literally. They’re more expensive and require more maintenance, and organizing them can be quite difficult. With all of this in mind, there are factors to keep in mind when looking for a multifamily home. In order to help you out during the buying process, we’ve put together a list of important factors to consider when buying a multifamily home.
Have a close look at your finances
Before you even start looking into buying a multifamily home, you’ll need to carefully consider your finances. This is because these properties are very large investments, and in order to get a mortgage for one, you will need to have both a good DTI (debt to income) ratio and a good credit score. Additionally, multifamily homes typically require larger down payments than regular homes do. Typically, a multifamily home will require a 25% down payment instead of the usual 20%. So, even before you begin the search for a suitable property, you need to make sure your finances are solid. As such, paying off your debts and improving your credit score is a vital step in the process. Also, familiarize yourself with property prices in the area you’re planning to buy in. This will help you avoid getting ripped off as well as help you prepare the down payment.
Choose the location wisely
Finding a multifamily house in the first place can be somewhat difficult. Mainly because zoning laws disallow multifamily homes in certain neighborhoods, so some research is required when looking. Keep in mind that, typically, suburban areas are less likely to allow multifamily housing. On the other hand, urban areas are more densely packed and are more likely to allow multifamily housing. Of course, nothing is guaranteed, which is why we recommend doing thorough research. And while some states are more open to multifamily properties, it’s mainly a neighborhood-by-neighborhood thing. For example, in New Jersey, two neighborhoods in the same city can have different rules, so be thorough with your research. In addition, when it comes to actually moving into one of these properties, in order to ensure quick delivery of your belongings, you should work with reliable movers. Local movers are recommended, as they generally know the area best. Consider not only the zoning laws but also the potential for rental income and property value appreciation. For instance, if you browse homes for sale in Charlottetown, you may find areas with promising investment opportunities.
Privacy can become a concern
If you are considering buying a multifamily home in order to rent it out, you need to think about privacy. Because they will essentially live on the same property, your tenants will always be able to easily talk to you. Your tenant will have the ability to talk about the property’s issues quite easily. And, remember, as a landlord you’re responsible for all maintenance and changes to the property. Additionally, you will likely hear what your tenants are doing on the property, and they will likewise hear you. All in all, this can bring about some privacy issues in the long run. Especially if you’re planning on renting to multiple people, infringements on privacy can become quite common. When it comes to the property itself, think ahead about home warranty. With larger homes, there are larger risks of things going wrong in the long run, so be prepared for this.
Taxes become even more complicated when you become a landlord
If you’re considering a multifamily property in order to rent it out, you will need to read the IRS publication about the residential rental property, publication 527. This publication will cover everything you need to know about your tax responsibilities as a landlord. The publication is very long and somewhat complicated, so prepare yourself mentally for this read. However, it’s very important that you read and understand the entire thing if you plan on becoming a landlord. If you’re buying a multifamily property in order to move in with another family, then nothing changes. Of course, you need to still consider property taxes, which tend to be higher on multifamily properties because of their higher value. Additionally, experts from All Season Movers note that you should properly research movers before hiring them. It’s very easy for amateurs to damage a property while moving your belongings into it, after all.
Prepare yourself for the maintenance
As we already mentioned, multifamily homes tend to come with more maintenance than regular homes. All in all, if you don’t take care of maintenance regularly, this can lead to quite a few problems in the long run. Remember, it’s vital to fix issues as they come up and never let them escalate. Simply because you’re dealing with a larger property, issues will pop up more often. As the homeowner and landlord (if you rent the property out) you’ll be fully responsible for fixing these issues. And since these issues tend to escalate quite quickly, you need to get them fixed quickly. But, of course, with issues like this prevention is the best approach. And when planning your move, having a moving checklist on hand is a good idea. Staying organized during the move is vital, and a moving checklist is one of the best ways to do that.
Important factors to consider when buying a multifamily home – closing thoughts
While buying a regular home can certainly get complicated and overwhelming, it’s much easier for this to happen when purchasing a multifamily property. There are a lot more things to keep in mind compared to buying a regular property. And, on top of that, even finding a multifamily property can be pretty difficult overall. As such, preparation is very vital when preparing to buy one of these properties, whether you want to rent it out or just move into one. We hope that this list of important factors to consider when buying a multifamily home helps you out, and we wish you a good day.