Savvy couples with extra money to spend should think about investing some of that money. There are a number of different options and ways to invest, including the stock market, mutual funds and real estate. Investing in multi-family homes, properties with two, three or four units, can be a lucrative way to earn money depending on the market and your own know-how. When investing in multi-family homes, consider a number of important factors.
Do Your Homework
As with all real-estate investments, location, location, location is the key to buying a multi-family property that will pay you the best dividends. Look for areas with high growth rates, such as those near schools, restaurants and shopping. While riskier, choosing multi-family properties in an up-and-coming area with lower property values can pay off big time if you get into the area before it becomes too hip and property values have already risen. Talk to city officials to learn what permits and zoning might be needed for that area, as multi-property units require special zoning in most areas.
Line Up Your Finances
Talk to a mortgage professional to get an idea of how much you can afford to invest in multi-family properties and learn about the financial advantages. Multi-family properties offer one big advantage for newbie investors in that they can live in one part of the home and rent out another. This not only allows them to provide a roof over their own heads, but the additional properties provide rental income to pay down the overall mortgage and bring in additional income each month. Additionally, there are a number of mortgage loan programs available for investors who will be living in part of the multi-family property and renting out the others that do not require large down payments amounts.
Enlist a Professional
Along with a mortgage professional, hiring a real-estate agent can help you navigate the buying process. They can walk you through all the steps, from searching for the home to buying to renting afterward. A real-estate agent can be an invaluable source of information when it comes to rental trends in an area and can help determine whether certain properties are good investments. When it comes time to rent out your properties, an agent can give you a good idea of the average rent amounts in that area.
Learn the Trade
To successfully make money investing in multi-family properties, you must first learn how to be a good landlord. There is more to the process than just collecting the rent each month. More properties mean more maintenance and more repairs, so if you are not a do-it-yourselfer, find quality handymen and contractors who can help you out if the need arises. Also, research that area’s rental rates to avoid pricing your properties to high. You can choose to hire a third-party to take care of all the landlord details, but that cuts out profit for you each month. By doing all the work yourself, you build in sweat equity to the home, increasing your overall profits when you eventually sell.
Lindsey Thompson began her writing career in 2001. Her work has been published in the Cincinnati Art Museum's "Member Magazine" and "The Ohio Journalist." You'll also find her work on websites like Airbnb, Chron.com, and USAToday.com. Thompson holds a Bachelor of Science in journalism from the Scripps School of Journalism at Ohio University.