Multi-Family homes are properties that consist of multiple housing units. These units can be either apartments or condos. Investing in a multi-family home is a very profitable investment strategy, however, there are some advantages and some disadvantages you should consider.
Pros of buying an investment multi-family home
They are easier to finance
Out of all the investment properties, it is easier to get a loan on a multi-family. You will have various loan and financing options with less down payments. Keep in mind that it is also easier for you to get one loan that covers multiple investment units in one location. You will not have to take multiple loans to finance multiple properties in different locations. Which makes it more convenient in terms of getting the financing needed for buying the property.
Buying a multi-family home will be more convenient for you to manage the property. If you decide to manage the property yourself, you can manage multiple units in one building instead of multiple locations
Multi-family homes are in less competition compared to single-family home.
Multi-Family homes generate more cash flow each month and they are least likely to get 100% vacancy rates. They are in high demand in the rental market.
You only have to buy one insurance policy for multiple units in the same location.
Cons of buying an investment multi-family home
They Cost More Money
Multi-family properties cost more than single-family properties. They also require larger down payment. Maintenance and repairs can be costly over time.
You Have More Tenants
This is not really a downside, but you will have to deal with more tenants and tenant issues. There is a potential that you might not get along with your tenants or they might not get along with one another. Take into consideration that you will have to deal with complaints and demands.
It could Get Complicated
When dealing with 4+ units, it could get time-consuming and you might have to deal with multiple issues at a time. When considering buying a multi-family property, take how much time you will have to dedicate to the property.
The process of funding the money to buy a multi-family home is restricted by completely different regulations than a single-family property. You will have to do some research to find out what you can and cannot do to prevent future legal issues.