Looking for Your First Home? You Might Want to Consider a Multi-Family

You want to move, you might even have to move, but you're finding funds are tight. Depending on the area you are in, there might not even be any rentals available- so you want to look at buying your first home. You might want to consider buying a multi-family house.

The benefits of owning a two, three or even four family house is in the income it produces. While it is not wise to spend above your personal limit on a mortgage, getting pre-approved with a multi-family house in mind can qualify you for a higher amount. They will consider the income it produces and take that into consideration while figuring out your finances. Once you get into a five family home, it becomes a commercial investment, so you might want to avoid that until you have a few years of "landlording" under your belt.

Many people who want to live virtually for free in their home, will choose either a three or a four family home. The added rental income can reduce what is personally coming out of your pocket for living expenses. It is a great way to break into homeownership, but still having a little bit of a cushion. Keep in mind though, that generally home ownership insurance is higher on a multi-unit, there is personal liability involved not only for you, but for your tenants as well. If you're looking for a bigger space, and a little more privacy, consider a two-family, however the income won't be quite as high as the bigger units.

There are downsides to owning a multi-family also, so think carefully before you make the jump. Emergencies will come up, maybe the furnace, or a stove that might decide to quit. When tenants rely on their landlord to keep their unit going - it's going to be coming out of your pocket to replace whatever has failed. It is always wise to set money aside, and not touch break into it, it will be only a matter of time before something breaks.

Being a landlord isn't for everyone. While it does have its benefits, primarily with the income, there are also several factors that may make you decide it's not for you. Make sure you do some homework before jumping in and making that commitment. Ask around, talk to others that have a multi-family house, and see how it works for them. There are also landlord "groups" in certain areas of the country, check around to see if there is one near you and if you could possibly sit in on a meeting prior to buying. As with any real estate transaction, due diligence is key before you get in over your head!