How to Make Money from Multi-Family Rental Properties
What are Multi-Family Properties?
Multi-family properties are structures and buildings that contain several separate residences for two or more families, roommates, and housemates.
These encompass properties such as apartment buildings, duplexes, triplexes, dormitories, pension houses and townhomes with a number of residential units in one structure.
Investing in Multi-Family Rental Property
Like any other real estate property, the cost of multi-family property depends on several factors which include condition, location, age of the building and income potential.
In general, one unit within a multi-family property is comparable to other single-dwelling family homes within the area or at least from a price-per-square-foot perspective.
As soon as you’ve decided to invest on a multi-family rental property, you would need to prepare for the down payment, closing costs, inspections and assessments, renovation and cost of repair.
One way to save some money upfront on your investment is to occupy one of the units and make use of owner-occupied financing for the property. By doing so, you can have low down payment requirements which are not usually offered otherwise.
Advantages of Investing in Multi-Family Rental Properties
For a potential investor, multi-family units or rental properties can equate to more income and a faster way to financial freedom. Imagine owning a residential building such as a 3-door apartment and having each one rented by 1 family.
Money from their monthly rent can give you passive income on top of the advance payment and security deposit that you would require.
Just like any form of business, you’re entitled to some expenses and you would need to shed off money to pay for maintenance.
Still, the pros can far outweigh the cons if you’ll learn how to manage your investment well such as paying attention to repairs right away, setting your own rules and standards for occupancy, and having a good relationship with your tenants.
If you are able to manage these aspects well, investing on a multi-family rental property can guarantee you a steady stream of income for a very long time.
Other Factors to Consider for Multi-Family Rental Properties
Multi-family rental properties have regular expenses. You would need to take into consideration factors such as property insurance, routine check-ups and maintenance, cost of repair, on-site security, property management, and regular upkeep.
You should pay attention to these costs accurately to make sure that you’re earning from your investment.
Awareness of these expenses can help you set the amount of your rent while keeping in mind the changes that occur over time such as competitive house pricing, house rental adjustments and increasing cost of home maintenance.
Moreover, insurance premiums have a tendency to fluctuate and repairs could be minimal one year and then become more costly over the following year.
To address all these issues, you must have a healthy and reliable financial cushion to cover all unexpected costs and the ever-changing real estate market situation.